Verso's Androscoggin Mill in Jay. Credit: Courtesy of Verso Corp.

Verso Corp., which in November revealed plans to sell its Androscoggin Mill in Jay as part of a $400 million deal, said Monday that it has all the needed regulatory approvals to move forward with the sale.

The final approval will come Jan. 31, when shareholders meet in New York to vote on the sale at the company’s stockholder meeting. But that meeting likely will be contentious, with two large stockholders opposing the sale.

Shareholders Atlas Holdings and Blue Wolf Capital Partners oppose the sale of the mills and have reportedly asked other stockholders to abstain from voting for it.

The private equity firms, which together own 9.43 percent of Verso’s stock, have proposed their own directors for Verso’s board. They also jointly own Twin Rivers Paper Co. in Madawaska.

In a Dec. 31 letter, executives of Atlas and Blue Wolf urged other Verso shareholders to vote for their board recommendations, saying Verso’s recommended board members lack the necessary experience to manage the company after the sale.

“We lack confidence in the board’s ability to establish and execute a value creation strategy for the company and manage capital investments wisely,” they wrote in the letter. “As one example, we have concerns about the significant investment the board approved in 2018 to convert the A3 paper machine at Androscoggin to engage it to produce containerboard and other packaging grades, which was undertaken without providing stockholders with any details on the expected return on investment.”

Verso on Tuesday issued a statement asking its shareholders to vote for the sale and to approve all of the directors that Verso is proposing for its board.

It also said it had offered on Jan. 18 to withdraw two of its board nominations and instead accept two of the Atlas and Blue Wolf nominees. But Verso also asked that Verso withdraw one of its nominees, terminate litigation by an Atlas and Blue Wolf affiliate and vote for the sale.

Verso said Atlas and Blue Wolf declined the settlement proposal on Jan. 18.

In a Jan. 20 offer, Verso also offered to pay certain expenses of Atlas and Blue Wolf and to expand the number of board members. Verso said Atlas and Blue Wolf rejected the offer while also saying they cannot vote in favor of the Pixelle sale until they get more information about it. That request for additional information has been the subject of a lawsuit by an Atlas and Blue Wolf affiliate.

The sale would involve both the Androscoggin Mill and Verso’s Stevens Point mill in Wisconsin. Pixelle Specialty Solutions, a specialty paper manufacturer based in Spring Grove, Pennsylvania, will buy the two mills upon approval by shareholders.

The sale would come just five months after Verso said it planned to invest $120 million into those two mills plus one more it owns. If approved by shareholders, Verso expects the deal to be completed in February 2020.

In a filing with the U.S. Securities and Exchange Commission, Verso said it expects to get $336 million in net cash proceeds from the sale of the two mills. Of that, $225 million to $282 million would be returned to stockholders. Verso said it expects to be debt-free after the sale.

There are about 500 employees at the Androscoggin Mill. Upon closing of the transaction, employees at the mill will become Pixelle employees, company spokesperson Kathi Rowzie said when the sale was announced in November.

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 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. 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.