Verso said it will sell its Androscoggin Mill in Jay. Credit: Courtesy of Verso Corp.

Just three months after saying it planned to invest $120 million into three mills, Verso Corp. said Tuesday that it will sell two of those mills, including the Androscoggin Mill in Jay.

The company said it has a definitive agreement to sell the Jay mill and its Stevens Point mill in Wisconsin to Pixelle Specialty Solutions LLC, a specialty paper manufacturer headquartered in Spring Grove, Pennsylvania, for $400 million.

The sale has been unanimously approved by the company’s board of directors and is subject to approval from the company’s stockholders and certain regulatory and other customary approvals. It is expected to be completed in the first quarter of 2020.

“We have undergone a thorough and comprehensive strategic process and firmly believe that the sale of these two mills at the agreed-upon terms and conditions is in the best interests of the company and our stockholders,” Gene Davis, co-chairman of the board, said in a statement.

Verso company executives told Wall Street analysts on a conference call Tuesday morning that they made the announcement of the investment in the two mills before Pixelle made its purchase offer. They decided to sell the mills based on the offer and could shift the money to use in their other mills, they said.

There are about 500 employees at the Androscoggin Mill. Upon closing of the transaction, employees at the mill will become Pixelle employees, according to company spokesperson Kathi Rowzie.

The company said it expects to get $336 million in net cash proceeds from the sale. Pixelle will take on $35 million of pension liabilities.

The board expects to return most of the proceeds to shareholders and use $54 million to reduce a portion of its unfunded pension liability.

Pixelle was formed in 2018 by Lindsay Goldberg, a private investment firm that partners with individuals who want to grow their businesses.

Upon the closing, Pixelle executives said the company will be the largest specialty paper business in the United States.

The Androscoggin Mill can produce approximately 425,000 tons of paper a year. It currently produces flexible packaging papers, release liner base, specialty labels, kraft papers and linerboard.

Verso said in August that it would invest an unspecified amount of money in the Jay mill to improve the No. 3 paper and pulp line, the No. 4 release liner paper machine and the EM-5, which produces food wrappers that can hold grease. Release liner paper is used in badges and other items that pull one piece of paper away from another.

Verso has been struggling financially and brought in a company to look at selling some of its assets or the company as a whole. In early 2015, Verso borrowed heavily to acquire its larger competitor NewPage. Also that year, it announced it would lay off 300 employees in Jay and shut down its No. 1 pulp dryer and No. 2 paper machine.

In early 2016, Verso filed for Chapter 11 bankruptcy protection and then exited the bankruptcy restructuring that same summer.

It idled the No. 3 machine in 2017 and laid off 120 employees. Those moves were in response to declining demand for coated paper used in magazines and other glossy publications.

It then announced in 2018 that it would restart the No. 3 machine and hire 120 people as it expands into new markets.

Verso on Tuesday reported a drop in net sales of $88 million to $616 million for the third quarter of 2018 that ended Sept. 30, and net income of $30 million, down from the $86 million in the third quarter of last year.

Verso on Tuesday also named Adam St. John as its CEO, replacing interim CEO Leslie T. Lederer, who will continue to serve as a senior transaction adviser to the company.