The parent company of NewPage Corp. is asking for federal approval to become a publicly-traded company on the hope that stock sales will raise enough money to help the firm reduce its $1.6 billion in debt and position it for future growth.
“We’re excited. We see this as an opportunity to continue to grow and invest in our business,” NewPage spokeswoman Amber Garwood said Wednesday from company headquarters in Dayton, Ohio.
The company, which owns the paper mill in Rumford, on Tuesday filed for U.S. Securities and Exchange Commission approval to go public. While the approval is pending, Garwood said she could not discuss how many shares might be offered or a price range for the stock.
NewPage was incorporated by Cerberus Capital Management last year, an investment firm with assets in excess of $14 billion. Cerberus also created NewPage Holding Corp., which is the entity seeking the initial public offering.
Cerberus bought MeadWestvaco in January 2005 for $2.3 billion. The sale included the Rumford paper mill, arguably one of the biggest economic influences in western Maine, and three others in Michigan, Maryland and Kentucky.
The Rumford mill employees about 1,100 workers and produces 600,000 tons of paper a year, according to the NewPage Web site.
The corporate dealings resulted in NewPage becoming the biggest coated paper company in North America, with about 6,000 employees and a total capacity to produce 2.2 million tons of coated paper annually.
According to the 168-page filing, NewPage had incurred $1.6 billion in debt by March 31, 2005. The “risk factors” section of the SEC filing cautions potential investors that the company “cannot assure you that our business will generate sufficient cash flow from operations, or that future borrowing will be available to us under our (senior creditors) in an amount sufficient to enable us to pay our indebtedness … or to fund our other liquidity needs.”
The filing also states that the amount of debt could make it difficult for NewPage to satisfy its existing creditors or obtain additional financing for working capital, debt service or general corporate operations.
The filing further states that if NewPage cannot get its debt under control, the company may be forced to sell assets, delay capital improvements or refinance its debt.
According to the SEC filing, NewPage’s business strategy calls for continued focus on coated paper, increasing its product mix, increasing profit margins by focusing on key customers, and continued efforts to lower costs by boosting productivity.