JAY — Verso Corp. announced Monday it is looking for ways to restructure its balance sheet and explore opportunities to raise funds to meet financial obligations, including the possible sale of its Androscoggin Mill and related hydroelectric facilities.

The news follows the August announcement that the company would shut down a paper machine, a pulp dryer and permanently eliminate 300 jobs at the Jay mill. The paper machine and dryer were shut down in October and September. Employees will either take early retirement or lose their jobs beginning Dec. 1.

That would leave about 560 workers at the mill.

The effort, including idling a Kentucky mill, is in response to a continuing decline in demand and oversupply of products. The move is to reduce Verso’s production capacity by 430,000 tons of coated paper and 130,000 tons of dried market pulp, according to the company.

Jay officials are hopeful that Verso Corp.’s restructuring efforts will allow the flexibility needed to continue operation of the Androscoggin Mill without having to proceed with Chapter 11 filings, Town Manager Shiloh LaFreniere said.

“The town remains committed to working with Verso and will support (its) efforts of restructuring or a sale of the mill,” she said.

The Tennessee-based company released its third-quarter earnings report Monday.

“Based on Verso’s current liquidity position and our projections of operating results and cash flows for the remainder of 2015 and 2016, we anticipate that we will not have sufficient resources to fund our most significant future cash obligations and, therefore, we believe that there is substantial doubt about our ability to continue as a going concern in the absence of a restructuring of our balance sheet,” Verso’s third-quarter earnings release stated.

As a result of its cash flow and liquidity concerns, the corporation has begun evaluating potential restructuring alternatives. It has engaged PJT Partners L.P. to provide them with restructuring and transactional services and O’Melveny & Myers LLP to provide them with restructuring legal advice and assistance. They have begun discussions with certain creditor constituencies to explore potential restructuring alternatives.

“We also are exploring opportunities to raise funds through potential sales of certain of our mills and related facilities, which may include the Stevens Point (in Wisconsin), Androscoggin (in Maine) and Duluth mills (Minnesota), our recently idled Wickliffe mill (in Kentucky), and the hydroelectric generation facilities associated with our Androscoggin mill.”

The company’s potential restructuring could occur in a consensual, out-of-court manner or through a court-supervised Chapter 11 bankruptcy proceeding.

In September, analysts warned that Verso filing for bankruptcy was imminent after its stock collapsed.

In other financial matters, Verso has challenged Jay’s valuation of the Androscoggin Mill, claiming it had been overvalued for tax years 2013 and 2014. The cases are waiting to be heard at the state level.

“While we intend to actively pursue a potential restructuring and potential asset sales, there can be no assurance that any of these activities will occur on terms acceptable to us or at all,” the release states.

The Maine Pulp and Paper Association will hold a scheduled summit from 7:30 a.m. to 4 p.m. Tuesday, Nov. 17, at the Hilton Garden Inn in Bangor to discuss challenges and advance solutions that could help ensure the future of the pulp and paper industry in Maine, according to a release.

“Incidentally enough, that summit will take place on the heels of an announcement which puts the future of Verso’s Androscoggin Mill in unsure territory, and on the same day that the bids for Lincoln Paper and Tissue will be opened as part of that mill’s bankruptcy process. Suffice to say, this is a very critical time for the industry, which in spite of the headlines, is still one of the state’s most important, directly employing almost 5,000 Mainers in high paying jobs.

“Mill leadership across the state recognizes its responsibility to improve operating efficiencies, make capital investments and innovate products to meet customers’ needs — but even the most successful mills need help on issues such as energy costs, access to fiber and tax policy, among others, if this industry is to compete and thrive in today’s challenging times. It is these collaborative concerns that we will focus on during tomorrow’s summit — and that must be urgently addressed by policymakers,” the association’s release stated.

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Verso Corporation Reports Third Quarter 2015 Results

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