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January 21, 2020

As vote nears on Jay mill sale, Verso promises to return up to $282M to shareholders

Photo of mill in Jay, Maine, showing logs and smokestacks File photo Verso Corp. said Monday it has closed the sale of its mill in Jay, and another in Wisconsin, to Pixelle Specialty Solutions Inc., of Pennsylvania.

Ohio-based Verso Corp. (NYSE: VRS) is urging shareholders to vote for the contested sale of two paper mills — one in Jay and one in Wisconsin — promising to return between $225 million and $282 million in net cash proceeds if the deal goes ahead.

Verso shareholders are scheduled to vote on the $400 million sale to Pennsylvania-based Pixelle Specialty Solutions Inc. at its annual meeting on Jan. 31. 

Tuesday's promise, made in a news release, comes a day after Verso announced that it had received all necessary regulatory approvals to complete the transaction. The company expects it to close in early February despite opposition by two rebel shareholders.

The shareholders, private equity firms Atlas Holdings and Blue Wolf Capital Partners, have made several unsuccessful attempts to acquire Verso since 2017. They allege in a lawsuit that Verso has not provided them with all the information they had requested on the proposed sale of the two mills.

Both sides have also been fighting over control of Verso's board amid expectations that if the buyout shops are able to stop the deal with Pixelle, it would lead to a merger with a competitor, Twin Rivers Paper LLC of Madawaska. Twin Rivers is jointly owned by Atlas Holdings and Blue Wolf Capital. 

Verso this week made two settlement proposals that the two firms immediately rejected: an offer to withdraw two board nominations in return for Atlas and Blue Wolf withdrawing the nomination of Timothy Lowe, end all litigation and vote in favor of the Pixelle transaction.

Verso said it objects to Lowe due to his "extensive history" and affiliation with Atlas and Blue Wolf as the former chair and CEO of Twin Rivers. Verso also raised concerns about Lowe's access to competitively sensitive information and the potential misuse of such information if Lowe were to join Verso's board.

"Verso does not believe that, even with the formal corporate governance parameters, Mr. Lowe's candidacy is in the best interests of stockholders," the company said in a new release Tuesday. 

Verso announced the deal with Pixelle in November 2019. It took financial advice on the transaction from Houlihan Lokey and legal counsel from Akin Gump Strauss Hauer & Feld LLP.

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