Despite an earlier announcement that Verso Paper was looking to merge with NewPage Corp., the latter reported Tuesday afternoon that it does not intend to merge, nor does it anticipate further discussions about the proposal.

 

“We don’t really have any comment beyond the information we put out today,” said Shawn Hall, director of communications for NewPage Corp., based in Miamisburg, Ohio. “We don’t have any comments other than what’s included in the website.”

 

NewPage Corp. operates seven mills throughout the United States, including one in Rumford, Maine.

 

Based in Memphis, Tenn., Verso Paper Corp. operates four mills nationally, two of which are Maine-based operations in Jay and Bucksport. Both companies produce coated paper used in magazines.

 

NewPage filed for bankruptcy in September 2011. The company is North America’s largest manufacturer of coated paper, employs about 750 people at its Rumford mill, and pays 46 percent of the town’s property taxes.

 

Following the announcement of its intention to merge with NewPage, Verso Paper’s stock jumped the most in almost four months. According to Bloomberg News, shares rose 48 percent to $1.73 at the close in New York, the biggest gain since March 8.

 

According to a statement issued Tuesday morning, Verso reported holding discussions with certain holders of NewPage’s 11.375 percent first-lien senior secured notes. Under the terms of Verso’s proposed deal, the holders of the notes would get $1.08 billion of new Verso notes, $150 million of new Verso stock and $200 million in cash.

 

In a statement later Tuesday, NewPage announced that neither the company nor its first lien debt-holder group supported Verso’s proposal, and the company does not expect further discussions with its rival company. According to the statement posted on the NewPage website, the proposed merger “posed significant downside risks to its stakeholders, employees and business.”

 

Both Verso and NewPage have struggled financially amid declining demand for magazine paper, while tablet computers such as Apple’s iPad become increasingly popular. Verso has posted net losses for nine consecutive quarters, according to data compiled by Bloomberg.

 

In a statement posted on Verso’s website, the company made the case that “a combination with NewPage would create a stronger business in the global coated and supercalendered paper industry because of the material cost savings that would be achieved.” Supercalendered paper is used for magazines, catalogs and directories.

 

But NewPage and its lien holders weren’t the only ones questioning the proposal.

 

“I think there’s a danger that at least one of our paper machines in Rumford could be in trouble and the jobs that go with it,” said Ron Hemingway, president of United Steelworkers Local 900, which represents workers at the Rumford Mill.

 

Hemingway said NewPage carries a higher debt ratio than Verso — 120 percent — meaning it owes 20 percent more than its assets are worth, according to figures provided at the time it filed for bankruptcy last fall.

 

Verso owes 80 percent of what its assets are worth, according to figures provided by United Steelworkers. But even the lower amount still remains a concern, Hemingway said, because most healthy companies carry debt ratios more in the range of 40 percent or less.

 

“We don’t look at it as a good idea to be bought by a company that’s in financial difficulty itself,” Hemingway said.