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Verso posts $43 million loss in second quarter, remains upbeat about buying NewPage

Gabor Degre | BDN
Gabor Degre | BDN
The Verso paper mill in Bucksport on March 2, 2014.
By Darren Fishell, BDN Staff

PORTLAND, Maine — Memphis-based Verso Paper announced this week it experienced second-quarter losses at about $43 million — on par with last year’s performance for the same period — as the company makes progress toward its planned purchase of NewPage.

The merger, under antitrust review by the U.S. Department of Justice, would create the largest single paper company in Maine, employing about one-third, or 2,300, of Maine’s paper millworkers at Verso’s mills in Bucksport and Jay and NewPage’s mill in Rumford.

Verso reported to investors Thursday it lost just less than $43 million in the second quarter as net sales also dropped to $320.9 million from $330.4 million in the same quarter last year. The company’s net loss for the second quarter of 2013 was a little more than $43 million.

David Paterson, Verso’s president and CEO, said in the earnings statement that, while overall sales declined and the company lost money for that period, the company “experienced continued strength in the pulp and specialty paper segments of our business.”

Coated paper, however, did not perform as well and “continued to show weakness in both price and volumes on a year over year basis,” Paterson said.

The company reported sales of coated paper dropped about 11 percent from the same period in 2013, to $225.4 million from $253.1 million. It attributed the drop to a 6 percent decline in sales volume and a 5.2 percent decline in average sales price per ton.

The companies’ mills in Maine together produce about 1.5 million tons of coated paper and 930,000 tons of pulp annually.

On the pulp side, the company said sales increased 20.1 percent in the second quarter of the year to $49.7 million, up from $39.1 million. That increase was driven entirely by a rise in sales volume, as the average sales price declined 4.7 percent from the same quarter last year.

Paterson said the company “continued to make good progress” toward its proposed $1.4 billion acquisition of NewPage during the quarter.

That progress included getting enough of its bondholders to agree to an exchange offer that would trade that debt for stock in the merged company, which would control more than 50 percent of the country’s capacity for producing coated paper.

Both companies have faced challenges in recent years, from the reduction in print advertising to the increased adoption of electronic readers to the competition with paper mills abroad. Verso leaders have said the deal would result in $175 million in cost savings for the joined company within the first 18 months after the transaction.

John Williams, president of the Maine Pulp and Paper Association, told the Bangor Daily News in an earlier story about the merger that the deal likely would result in some consolidation, though not necessarily in a way that would harm millworkers in Maine.

“They’ll have 11 mills, and I’m sure they’ll look at them across the U.S. and consider where they might want to find efficiencies,” Williams said. “They probably won’t keep all of the production going that they have at all of those 11 mills.”

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