PORTLAND, Maine — Verso Paper’s chief executive said the company is closer to its planned acquisition of NewPage, a proposed merger that would create the largest single paper company in Maine.
The $1.4 billion purchase would bring together the companies that employ about one-third, or 2,300, of Maine’s paper mill workers at Verso’s mills in Bucksport and Jay and NewPage’s mill in Rumford.
“We have made significant progress to completing our acquisition of NewPage,” Paterson said in a statement issued early Thursday.
The company had set a midnight Wednesday deadline for two groups of bondholders to agree to what’s called an exchange offer, which generally allows them to exchange the Verso debt they hold into stock in the company. Enough bondholders from both groups agreed to the offer.
John Williams, president of the Maine Pulp and Paper Association, said the merger that still requires regulatory approval has potential benefits and downsides for 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.”
Both companies have faced challenges in recent years from a reduction in print advertising, increasing adoption of electronic readers and competition from 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.
Williams said he views the pending deal as a trade-off for Maine: on one hand, the merger would appear to make both companies stronger, but it also could involve shutdowns of mills or paper machines.
“But I think that potential is there anyway whether the merger goes through or not,” Williams said.
Williams said he hasn’t evaluated how the Maine mills stack up against Verso’s Michigan mill and NewPage’s seven other mills outside of Maine, but that the state has a good source of wood fiber for the coated paper each company makes for catalogues and glossy magazines.
The announcement of the successful exchange offer comes after a previous offer failed. That stood to hold up the deal because NewPage officials said they would re-evaluate the merger if Verso was unable to reduce its debt through an exchange offer.
Credit rating agency Moody’s held a negative outlook on Verso’s credit since the announcement of the deal and downgraded its ratings in June over a variety of the company’s credit and bonds. Moody’s also raised a rating assessing the probability Verso would not be able to pay some of its debts.
An evaluation by consultants at Murray, Devine & Co. projected the company would remain solvent after the proposed merger and, after five years, would be able to further reduce its debt to about $1.4 billion from $2.5 billion it’s expected to have at the deal’s closing.
For the merger to move ahead, it will need to pass muster with federal antitrust regulators and also get approval from Verso’s shareholders, who recently postponed a special stockholder meeting to vote on six proposals, four of which directly relate to terms of the NewPage acquisition. The vote will be held Aug. 12.
Reuters reported that the joined company would control about 54 percent of the capacity to produce coated paper in the United States. Three of five antitrust experts the news service surveyed said the acquisition could be approved with conditions. One said it faced an “uphill battle,” and another said it could go either way.
The companies have said they expect the deal to close in the second half of this year.