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Verso, owner of Luke Mill, files for Bankruptcy

January 26th, 2016 by WCBC Radio

Verso, the corporate owner of the Luke paper mill, filed for bankruptcy Tuesday.  The Cumberland Times News reports company officials said normal operations at its mills will continue, and the company expects to emerge from bankruptcy as a viable entity. "While filing for Chapter 11 protection was a difficult decision, we are pleased that we enter this process with strong creditor support. We have worked together with a broad spectrum of financial creditors to develop a restructuring plan to eliminate $2.4 billion of our outstanding debt and to exit the Chapter 11 process in a short timeframe," said Verso President and CEO David J. Paterson. The filing took place at the United States Bankruptcy Court in the District of Delaware. Verso expects to reach an agreement with major creditors so that a plan of reorganization will allow the company to emerge from bankruptcy, rather than be liquidated, company officials said. In Wisconsin, Verso has stopped payments to local wood suppliers, according to the Wisconsin Rapids Tribune. Whether any firms supplying the Luke mill have been denied payment for services is unclear.

Verso officials said they expect to finalize a debtor-in-possession financing package totaling up to $600 million quickly that will provide the company with significant operational flexibility to successfully reorganize. The package will provide Verso with sufficient liquidity to support its ongoing operations for the foreseeable future during the Chapter 11 process. 

Paterson explained the filing, noting that "since Verso acquired NewPage Holdings Inc. in January 2015, a confluence of external factors, including an accelerated and unprecedented decline in demand for our products, a significant increase in foreign imports resulting from a strong U.S. dollar relative to foreign currencies, and Verso's impending financial obligations made it apparent that action was needed."  

"Verso chose to take this proactive step with the firm belief that our company will emerge from the Chapter 11 process as a stronger company that is positioned to compete and win, even as challenges in the overall economic environment continue," Paterson said.

NewPage, the previous owner of the Luke Mill, filed for bankruptcy in 2011. Verso took over the Luke mill in late 2014 as a result of a merger with NewPage Corp. The Luke paper mill employs about 800 people. 

In October, the New York Stock Exchange suspended trading in the company’s stock after the share price dropped to 15 cents. The stock is now traded over the counter, and has recently fallen as low as a few cents. 

Last year, the company slashed jobs at plants located in Kentucky and Maine to save costs. At the time, Verso said the Luke plant would be spared layoffs. Verso idled its mill in Wickliffe, Kentucky, affecting about 310 workers and shutting down the No. 1 pulp dryer and No. 2 paper machine at its Androscoggin Mill in Jay, Maine, affecting about 330 workers.

The company said 300 jobs were permanently lost.

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