Verso Paper Corp. Announces Permanent Shutdown of Sartell Mill
MEMPHIS, Tenn.--(BUSINESS WIRE)--
Verso Paper Corp. (NYSE:VRS) today announced that after conducting a
comprehensive assessment, Verso has made the difficult decision not to
reopen its paper mill in Sartell, Minnesota. Verso's decision is based
on the length of time that it would take to rebuild the mill structures
and systems that were destroyed in the Memorial Day fire and explosion,
and the marketplace challenges that would present.
The permanent closure of the Sartell Mill will reduce Verso's annual
coated groundwood capacity by 180,000 tons or approximately 20 percent,
and will eliminate approximately 35,000 tons of annual supercalendered
paper capacity.
Verso President and CEO David Paterson met with state and local
officials earlier today to deliver the news in person. "After a thorough
review of the many factors involved following the Memorial Day tragedy,
we have made the very difficult decision not to reopen the Sartell
Mill," Paterson said. "The mill has not been competitive for a number of
years and, despite our employees' dedicated efforts since the December
2011 shutdown of two of the facility's three paper machines, our
assessment indicates that it is impossible for the mill to achieve a
competitive position in today's marketplace, especially after a setback
of this magnitude and duration. We will work closely with local and
state officials to develop options for the future use of the mill site."
"We know that the decision to permanently close the mill will have a
significant impact on many people across this region, especially our
Sartell Mill employees and their families," said Verso Senior Vice
President for Manufacturing and Energy Lyle Fellows. "We continue to
work with affected employees to help them access the resources needed to
identify alternative employment opportunities."
Verso has been working with Sartell Mill customers to make necessary
production transitions since the mill was idled by the Memorial Day fire
and explosion. "Even in the face of sudden and challenging
circumstances, our customers knew they could depend on Verso to deliver
high-quality paper products and exceptional customer service," said
Verso Senior Vice President of Sales, Marketing and Product Development
Mike Weinhold. "Our team has worked hard to make needed shifts in
production and we are meeting our customers' needs at Verso's other
mills."
The mill closure will result in an aggregate pre-tax charge to earnings
of approximately $114 million, which is expected to occur primarily in
the third quarter of 2012. This includes approximately $19 million for
severance and benefit costs; approximately $81 million in non-cash
charges primarily related to the impairment of property, plant and
equipment; and approximately $14 million related to other costs. The
severance and other shutdown costs require the outlay of cash, which is
expected to occur primarily in the third quarter of 2012. Settlement
negotiations regarding this loss claim with our insurance carrier are
continuing and we expect resolution in the coming months.
Costs associated with shutdown activities are based on currently
available information and reflect management's best estimates;
accordingly, actual cash costs and non-cash charges and their timing may
differ from the projections stated above.
"The Sartell Mill has a long and proud history, and we thank all of our
employees, the community and the many local and state officials who have
partnered with us over the years," said Sartell Mill Manager Matt
Archambeau. "It's impossible to put into words how much your support has
meant to our company."
Forward-Looking Statements
In this press release, all statements that are not purely historical
facts are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Forward-looking statements may be identified by the words
"believe," "expect," "anticipate," "project," "plan," "estimate,"
"intend," and similar expressions. Forward-looking statements are based
on currently available business, economic, financial, and other
information and reflect management's current beliefs, expectations, and
views with respect to future developments and their potential effects on
Verso. Actual results could vary materially depending on risks and
uncertainties that may affect Verso and its business. For a discussion
of such risks and uncertainties, please refer to Verso's filings with
the Securities and Exchange Commission. Verso assumes no obligation to
update any forward-looking statement made in this press release to
reflect subsequent events or circumstances or actual outcomes.
About Verso
Based in Memphis, Tennessee, Verso Paper Corp. is a leading North
American producer of coated papers, including coated groundwood and
coated freesheet, and specialty paper products. Verso's paper products
are used primarily in media and marketing applications, including
magazines, catalogs and commercial printing applications such as
high-end advertising brochures, annual reports and direct-mail
advertising. Additional information about Verso is available on the
Company's website at www.versopaper.com.
References to "Verso" or the "Company" mean Verso Paper Corp. and its
consolidated subsidiaries unless otherwise expressly noted.
Verso Paper Corp.
Robert P. Mundy, 901-369-4128
Senior Vice
President and Chief Financial Officer
robert.mundy@versopaper.com
www.versopaper.com
Source: Verso Paper Corp.
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