'We hope that includes reopening the Wisconsin Rapids mill': Verso Corp. announces proposed merger with BillerudKorsnäs AB

Wisconsin Rapids Daily Tribune

WISCONSIN RAPIDS – Verso is poised to have a new owner, but the announcement of the pending sale hasn't provided clarity on the future of the Wisconsin Rapids mill.

On a press and analyst conference call Monday morning, Christoph Michalski, president and CEO of BillerudKorsnäs AB, the Swedish company that will acquire Verso, called the Wisconsin Rapids mill the largest "minor asset" in the acquisition and explained the facility is currently in use as a converting facility, but productions of paper and pulp are idle.

Michalski said the company at this stage does not intend to fire up the Wisconsin Rapids mill, but is considering the future for that site, as well as the hydroelectric power company that will come with the acquisition. The company will determine what the best solution is for the Wisconsin Rapids site, including whether it will keep or sell it.

Verso Corp. announced Sunday evening that it had entered into a definitive merger agreement under which BillerudKorsnäs will acquire all outstanding shares of Verso for $27 per share, or approximately $825 million.

In a news release on Sunday, the Swedish company said it plans to convert the Escanaba, Michigan, mill to paperboard production and will continue operating the Quinnesec, Michigan, mill, producing coated freesheet and specialty papers. The statement contained no mention of Wisconsin Rapids.

Scott Suder, the president of the Wisconsin Paper Council, said the group is cautiously optimistic about the merger and what that could mean for the Wisconsin Rapids mill.

“They’re going to make investments,” Suder said. “And we hope that includes reopening the Wisconsin Rapids mill.”

Suder said the council has not worked directly with BillerudKorsnäs in the past, but he is aware of the company's reputation for wanting to increase its footprint in the United States. The Wisconsin Paper Council is looking forward to working with them and discussing the Wisconsin Rapids mill, whether that would be for the company to restart it or sell it to another owner who would make sure the mill comes back online.

The Wisconsin Paper Council will work with community leaders and legislators to do everything they can to show the new owners how important the Wisconsin Rapids mill is to the community and its value as an asset for the future of BillerudKorsnäs, Suder said.

Republican state Rep. Scott Krug of Nekoosa shared similar sentiments and said it’s time to convince BillerudKorsnäs how important the Wisconsin Rapids asset is. While it seemed unusual for the company to not include the Rapids mill in Sunday's announcement, there may be opportunities to convert the mill's machinery to align with BillerudKorsnäs' plans, Krug said.

If BillerudKorsnäs chooses to sell the Wisconsin Rapids mill, one option could be the Consolidated Cooperative, a group formed by the Great Lakes Timber Professionals Association to include community members and millworkers with the goal of ultimately owning and running the Wisconsin Rapids mill locally. The cooperative filed a letter of intent to purchase the local mill earlier this year, but the group has also expressed interest in working with Verso or any future owner to either assist in restarting the Wisconsin Rapids mill or purchasing it to run it, itself.

Krug said he hopes the cooperative can join discussions on the future of the Wisconsin Rapids mill before the deal closes next year.

“(This) might be a very big opportunity for them,” Krug said.

One major reason the timber professionals got involved in the future of the Wisconsin Rapids mill was the effect the shutdown had on the timber industry.

On Monday's conference call, Michalski said Verso's surplus of low-cost, quality fiber and its wood supply was "unbeatable" in the Upper Peninsula of Michigan and in Northeastern Wisconsin.

Verso's board of directors followed the recommendation of its special committee to unanimously approve and recommend approval of the merger by Verso's shareholders, according to a news release from Verso. The transaction is expected to close in the second quarter of 2022 after Verso's shareholders approve the transaction in a special meeting. The transaction is also subject to regulatory approvals and other closing conditions. The merger will be primarily financed by BillerudKorsnäs.

The offer at $27 per share is about 35% more than what Verso’s shares were worth on Dec. 17. In contrast, Atlas Holdings in July offered to pay $20 per share for the company.

BillerudKorsnäs, a maker of packaging products, was founded in 2012 and operates seven production units in Sweden and Finland with about 4,400 employees across more than 13 countries, according to its website. It focuses on products including medical and hygiene, industrial, food and beverages and consumer and luxury. It produces liquid packaging board, used for beverages and other liquids, as well as cartonboard and containerboard. Its paper products are used in packaging for medical equipment and food.

Acquiring Verso is in line with BillerudKorsnäs' strategy to grow its paperboard profits and to expand into North America, according to the news release. A partnership with Verso also offers more export opportunities to Asia and Europe.

Verso’s board of directors formed a special committee this summer to evaluate the proposal from Atlas and to look into any other options. In the news release, Verso’s president and chief executive officer, Randy Nebel, said the committee carefully negotiated the agreement with BillerudKorsnäs, and Verso’s board members think the transaction “maximizes value for shareholders.”

"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," Nebel said. "We are excited to join forces with BillerudKorsnäs and benefit from enhanced opportunities as part of a larger, stronger organization."

Mayor Shane Blaser said Monday he had been on the phone looking for more information since Sunday’s announcement and hopes to hear more soon about what the merger might mean for Wisconsin Rapids.

“I have to be optimistic,” he said.

In Sunday's release, Michalski said merging the companies combines BillerudKorsnäs’ expertise in fiber packaging materials with Verso’s assets and platform for long-term growth.

The merger with Verso will allow BillerudKorsnäs to produce coated virgin fiber material in the Midwest, while also transforming part of the business into paperboard production to serve customers in the United States.

BillerudKorsnäs will expand in North America through the deal with Verso, and the company expects to grow over the next 10 years and beyond, according to the release. When the transaction is complete, the merged company will be one of the largest producers of high-quality virgin fiber paper and packaging, according to the release.

"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," Michalski said.

Contact Caitlin at cshuda@gannett.com or follow her on Twitter @CaitlinShuda.