The Androscoggin mill in Jay. Credit: Courtesy of Verso Corp.

Verso stockholders approved the sale of two mills — including its Androscoggin mill in Jay — as part of a $400 million deal during an annual meeting of shareholders last week.

That approval comes after Verso sought to fend off a challenge from two stockholders — private-equity firms Atlas Holdings and Blue Wolf Capital Partners — that aimed to derail the deal.

The company said Monday, citing preliminary results, that more than 70 percent of outstanding shares approved the deal during the Jan. 31 vote.

As part of the deal, Verso will sell its Jay mill and its Stevens Point mill in Wisconsin to Pixelle Specialty Solutions LLC, a specialty paper manufacturer headquartered in Spring Grove, Pennsylvania. The company said last month that it had secured the needed approvals from regulators and that the board of directors had approved the sale.

The deal is expected to close in early February, according to Verso.

Verso has said the deal will leave it debt free and it will focus on graphic paper operations. The Androscoggin mill, which employs about 500, currently produces flexible packaging papers, release liner base, specialty labels, kraft papers and linerboard.

The company said that up to $282 million and not less than $225 million in proceeds from the sale will be returned to stockholders.

The deal with Pixelle was announced in November 2019, just three months after Verso unveiled a plan to invest $120 million into three mills, including the one in Jay.

Pixelle was formed in 2018 by Lindsay Goldberg, a private investment firm that partners with individuals who want to grow their businesses. Pixelle executives have said the deal will make the company the largest specialty paper business in the United States.

Verso said in August 2019 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. Later 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.