Verso Corporation, the largest U.S.-based maker of magazine-quality paper, told customers this morning that "cash flow and liquidity concerns" might force it to restructure or to sell some mills. The announcement is no surprise to Wall Street, where Verso's bonds have been trading at pennies on the dollar in anticipation of a Chapter 11 bankruptcy…
R.R. Donnelley and Quad/Graphics, the USA's two largest printing companies, apparently have their sights set on gobbling up more competitors -- but not each other. Quad's CEO, Joel Quadracci, was caught off guard on Tuesday by a question from a Goldman Sachs analyst at the end of Quad's quarterlyearnings conference call. "I'd kind of love to hear your thoughts on potential regulatory pushback or maybe lack thereof on a tie-up between your company and your biggest competitor," said Fred Krom. Quadracci at first thought the question was about Courier Corp., which Quad recently planned to acquire until Donnelley stepped in.
Today's announcement that Catalyst Paper will buy two NewPage coated-paper mills apparently means that the merger of NewPage and Verso Paper will move forward. Catalyst revealed that it will purchase NewPage's Rumford, Maine and Biron, Wisconsin mills for $74 million -- more than quintupling the Canadian company's capacity for making coated paper. One condition of the sale is that Verso-NewPage deal be consummated.
October began with both good news and bad news on the cost front for publishers of magazines and catalogs.
Because of announcements made on Wednesday, publishers can scratch the usual January postage rate increase from their 2015 budgets but should probably count on price increases for coated paper.
The U.S. Postal Service Board of Governors announced it would not raises prices on "market-dominant" mail classes early next year, contrary to its usual practice of implementing inflation-based price hikes in January.
The proposed merger of NewPage and Verso Paper may be on the ropes, but it has brought much attention to the oddities of the U.S. market for coated paper.
Intrigued by the unusual proposal (which Verso was forced to reconsiderlast week), the bankruptcy experts at The Capitol Forum recently published comments from a federal prosecutor explaining why the U.S. coated-paper industry is prone to cooperation among competitors.
Somewhere there must be a person who fully understands all aspects of the proposed combination of NewPage and Verso Paper, North America's two largest makers of magazine-quality paper. But mostly there is confusion and debate and even misinformation about the marriage and what it would mean for the paper industry and its employees, for magazine publishers, and for catalogers.
Such a pre-nup! What Verso and NewPage have worked out is far more complex than described in the companies' announcements or even in stock analysts' reports.
Verso Paper Corp. today announced that they have entered into a definitive agreement under which Verso will acquire NewPage in a transaction valued at $1.4 billion.
Recently, National Geographic Society changed course on recycled fiber, walking away from its long held belief that using recovered fiber in its publications has negligible environmental benefit and agreeing to explore recycled paper options. We are encouraged by National Geographic Society’s initial indication that they may begin printing on recycled paper soon. If they do so, they will join the growing list of other magazines that have been using recycled paper for a decade or more like, Fast Company, Audubon, YES!, and Ranger Rick.
Only three weeks after Verso Paper’s CEO said acquiring NewPage was the key to its future, Verso announced it no longer wants to buy its rival. Why the sudden change of heart?
In a mid-August interview with The (Memphis) Commercial Appeal, Verso CEO David J. Paterson said that the company’s key strategy is acquiring ailing companies “to get the cost reductions we can't get on our own.” NewPage, which is in Chapter 11 bankruptcy reorganization, is Verso’s only publicly announced target.
Talk about the pot calling the kettle black: NewPage told a bankruptcy court this week it is reluctant to merge with Verso Paper because of its rival’s high risk of going bankrupt.
But it also revealed an even bigger reason to rebuff Verso’s advances: Rather than engaging in a good-faith effort to forge a union between North America’s two largest makers of magazine-quality paper, NewPage said, Verso’s owners are engaging in “tactics of holdup and delay” to weaken NewPage and hinder its emergence from bankruptcy protection.