MOSINEE, Wis. — Wausau Paper Corp. said Tuesday it will permanently close its facility in Jay, Maine, affecting about 96 jobs, and suspend its dividend to conserve cash and reduce debt.
The paper manufacturer expects that stopping dividend payments will save more than $16 million in cash annually, and the paper mill closure is expected to boost annual pretax operating profit by $20 million.
Wausau also plans to reduce operating costs by trimming its work force and cutting back on capital spending.
“The dividend suspension and Jay mill closure are particularly difficult decisions to make, but are nonetheless necessary to preserve liquidity and match capacity with demand during a period of severe economic difficulty,” Chief Executive and President Thomas Howatt said in a statement.
In December, Wausau shut down its paper machine with an annual production capacity of 40,000 tons. Its decision to close the Maine mill by May 31 will cut the company’s specialty products annual production capacity by 28,000 tons, or 10 percent.
Wausau estimates the pretax costs related to these efforts will total roughly $26 million. Of that, $22 million represents non-cash charges. It expects to record charges of about $2.4 million and $22 million in the first and second quarters, respectively, with the rest occurring over the remainder of 2009.
The company’s previously announced cost reduction plans included a hiring freeze, salary freeze for 2009 and suspension of company matching contributions on certain 401(k) plans. Wausau also is limiting its capital spending and working capital.
Shares of Wausau added 10 cents to close earlier at $5.26.