Verso Corporation to be acquired by BillerudKorsnäs, Wisconsin Rapids mill’s future still uncertain
(WSAW) - Verso Corporation has entered into a definitive merger agreement with BillerudKorsnäs. The fates of the Wisconsin Rapids mill and hydroelectric power plant are uncertain, however.
The president and CEO of BillerudKorsnäs Christoph Michalski said in a press conference Monday morning that while it has big plans for Verso’s Escanaba and Quinnesec mills, they are still deciding what they will do with the Wisconsin Rapids mill and hydroelectric power company.
“There are also some other minor, minor assets coming with this acquisition, which the biggest one is Wisconsin Rapids,” Michalski said. “It’s currently, it’s used as a converting facility, but the papermaking and pulp making is idle, so, so we do not intend -- at this stage -- to fire up that mill and we are now looking at what is the future of that asset. And also there’s a hydroelectric power company coming with that acquisition where we’re also looking what is the best solution for these, for these type of assets -- to keep them or to sell them on.”
Of course, the impact the Wisconsin Rapids mill has on the city and the state as a whole is not minor. It has greatly impacted the city’s economy as it employed most of the people in the city. The mill also processed 25% of the state’s pulp product and it has not been replaced, which has caused timber harvesting and lumber processing to slow. However, those impacted or closely working on the future of the Wisconsin Rapids mill remain optimistic and plan to show BillerudKorsnäs just how valuable of assets the mill and hydroelectric company are on a local, state, national, and global scale.
“Since the closure, a lot of people retired, others found other employment and I know there’s still that group of people hoping that there’s going to be a reopening and they can go back to work and that’s my hope for them also,” Mayor Shane Blaser of Wisconsin Rapids expressed.
He said the city is in the middle of building a redevelopment plan should the mill not reopen, but that is not Plan A.
“I talk to folks every day who walked out those doors for the last time in June of last year who have said continuously they would love to come back here and be part of it again -- maybe not under the Verso umbrella, but to be working for a product that they can create right here that’s sellable across the country, nationally, globally I should say. So, the workforce would be here,” republican Rep. Scott Krug said.
He and the other state legislators representing the area have supported what is known as the Mill Bills, which Gov. Evers has vetoed due to concerns that the American Rescue Plan Act funds that the bills would use as a revolving loan fund to purchase the mill would not be allowed use the money in that way.
“I have supported multiple bills to fund the Wisconsin Rapids mill over the past year, and I will always stand ready and willing to work with my legislative colleagues, the governor, and the paper, pulp, and forestry industries to address any needs that may arise through legislation to ensure the vitality of the Wisconsin Rapids mill and community,” democratic Rep. Katrina Shankland wrote in a statement.
The president of the Timber Professionals Cooperative, Dennis Schoeneck told NewsChannel 7 the forthcoming acquisition is good news, and they are still looking to purchase the Wisconsin Rapids mill if possible. The Wisconsin Economic Development Corporation also expressed great interest in getting the mill back open whatever that may look like.
“We’ve already reached out to this company today,” WEDC COO and deputy secretary, Sam Rikkers said. “We’ve made it aware of the powerful tools we have at our disposal and we’ll be working with it as it plans its investments and we certainly hope that it does so in Wisconsin and want to be that partner to BillerudKorsnäs if it does so.”
BillerudKorsnäs has seven production units in Sweden and Finland, and about 4,400 employees in over 13 countries. It will acquire all of the outstanding shares of Verso for a purchase price of $27 per share in cash, or approximately $825 million. The transaction is expected to close in the second quarter of 2022.
According to a news release, BillerudKorsnäs aims to build one of the most cost-efficient and sustainable paperboard platforms in North America by converting several of Verso’s assets into paperboard machines while maintaining Verso’s position as a quality and cost leader in specialty and coated freesheet paper.
“I hope they come into Wisconsin now and that they will be good neighbors because Stora Enso was not and they made many of the decisions that led to the multiple bankruptcies that Wisconsin Rapids, and now the closure of it,” Rep. Tom Tiffany (R-WI) noted. “Much of that stems from their management 20 years ago.”
Rep. Tiffany said he welcomes the new company but is concerned with how a previous Scandanavian owner led the mill to where it is today. He is hopeful
Verso is headquartered in Miamisburg, Ohio, and have two paper mills in Michigan, a roll to sheet converting facility in Wisconsin (paper production idled), and two distribution centers in Sauk Village, Illinois, and Bedford, Pennsylvania
According to a news release, Verso will become the platform for BillerudKorsnäs’ future expansion in North America and is expected to provide continuous growth opportunities over the next ten years and beyond. The combined company will be one of the largest providers of virgin fiber paper and packaging with a cost and quality advantage.
Randy Nebel, President and Chief Executive Officer of Verso, said, “With the support of our talented team, Verso has successfully streamlined our operations and reduced costs while strategically investing in projects to enhance our ability to support our customers. This transaction builds upon our considerable progress and better positions the combined company to invest in our North American manufacturing capability, provide high-quality paper products to customers and accelerate growth.”
Mr. Nebel continued, “This agreement follows careful consideration and negotiation led by the special committee of our Board which was formed following receipt of the unsolicited proposal earlier this year. Our full Board believes this transaction maximizes value for shareholders, who will receive a significant premium and immediate and certain value. In BillerudKorsnäs, we found a partner that shares our commitments to safety, quality, sustainability and innovation and is uniquely positioned to recognize the value of our business. We are grateful for BillerudKorsnäs’ partnership over the past several months in reaching this compelling transaction, particularly amidst an uncertain and restrictive pandemic-related travel environment. We are excited to join forces with BillerudKorsnäs and benefit from enhanced opportunities as part of a larger, stronger organization.”
Christoph Michalski, President and CEO of BillerudKorsnäs, commented, “The combination of BillerudKorsnäs’ expertise in high-quality virgin fiber packaging materials and Verso’s attractive assets creates an excellent platform for long-term profitable growth. We will obtain cost-effective production of coated virgin fiber material in the Midwestern United States. We also plan to sequentially transform part of the business into paperboard production while continuing to serve the U.S. customers. Our investments will create new U.S.-based jobs in a growing market and accelerate the transition from plastic-based packaging materials to renewable sources.”
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