MIAMISBURG, Ohio, June 9, 2020 / PRNewswire / – Verso Corporation (NYSE: VRS) announced today that it is taking immediate action to offset the unprecedented market decline due to the COVID-19 pandemic and reposition the company for future success.
Verso will shut down paper mills indefinitely at Duluth, Minnesota, and Wisconsin Rapids, Wisconsin, while exploring viable and sustainable alternatives for the two factories, including restarting if market conditions improve, marketing for sale, or shutting down permanently. The decision to reduce production capacity is driven by the accelerating decline in demand for graphic paper resulting from the COVID-19 pandemic. Home orders have dramatically reduced the use of print advertising in various industries including retail, sports, entertainment, and tourism. According to Fastmarkets RISI, North American print and write demand fell 38% year-on-year in April, and operating rates are expected to drop well below 70% in the second quarter.
“It is essential that we maintain a healthy balance sheet and focus on cash flow, while balancing our product offering and customer demand,” said the President and CEO. Adam St. John. “After a comprehensive review of demand forecasts and post-pandemic capacity, we made the difficult decision to slow the Duluth and Wisconsin Rapids mills. We expect that decommissioning these facilities will improve our free cash flow. The sale of inventory is expected to offset the cash costs of idling factories. “
Verso plans to idle the Duluth plant by the end of june 2020, and the Wisconsin Rapids plant by the end of july 2020, resulting in the layoff of approximately 1,000 employees. Verso will continue to supply graphic and specialty papers in roll and sheet form, as well as wrapping papers and pulp.
“Decisions about inactive facilities are always difficult because they impact employees, their families and their communities,” said St. John. “Verso is committed to treating all of our affected employees with fairness and respect. As always, safety is our top priority and will be our primary focus during this difficult time.”
Verso Corporation is the company of choice for those looking to successfully navigate the complexities of paper supply and performance. One of North America’s leading producers of graphic and specialty papers, packaging and pulps, Verso provides insightful solutions that help improve efficiency, productivity, brand awareness and customer business results. Verso’s long-standing reputation for quality and reliability is directly linked to our vision to be a passionate, respected and trusted company. Verso’s passion is rooted in ethical business practices that demand safe workplaces for our employees and a sustainable wood supply for our products. This passion, combined with our flexible manufacturing capabilities and unmatched commitment to product performance, delivery and service, make Verso a preferred choice among commercial printers, paper merchants and brokers, converters, publishers and other end users. For more information, visit us online at versoco.com.
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”, “potential” and other similar expressions. Forward-looking statements are based on currently available business, economic, financial and other information and reflect the current beliefs, expectations and opinions of management regarding future developments and their potential effects on Verso. Actual results could vary significantly depending on the risks and uncertainties that may affect Verso and its business. Verso’s actions and actual results may differ materially from what is expressed or implied by these statements due to a variety of factors, including: uncertainties regarding the duration and severity of the COVID-19 pandemic and actions aimed at reduce its spread; the long-term structural decline and general weakening of demand facing the paper industry; adverse developments in general business and economic conditions; developments in alternative media, which are expected to negatively affect demand for some of Verso’s key products, and the effectiveness of Verso’s responses to these developments; intense competition in the paper industry; Verso’s ability to compete with certain specialty paper products for a period of two years after the closing of the Pixelle sale; Verso’s activity being less diversified following the sale of two mills after the close of the Pixelle Sale; Verso’s dependence on a small number of customers for a significant part of its business; Verso’s limited ability to control the price of its products or pass cost increases on to its customers; changes in the costs of raw materials and purchased energy; negative publicity, even unjustified; any breach of environmental or other laws or regulations, even inadvertently; legal proceedings or litigation; any labor dispute; and the potential risks and uncertainties listed under the heading “Risk Factors” in Verso’s Form 10-K for the year ended. December 31, 2019 and Quarterly Report on Form 10-Q for the completed fiscal quarter March 31, 2020, and from time to time in other documents filed by Verso with the Securities and Exchange Commission. Verso assumes no obligation to update any forward-looking statements made in this press release to reflect subsequent events or circumstances or actual results.
SOURCE Verso Corporation