"The combination of Verso and NewPage will create a stronger business that is better positioned to serve our customers and compete in a competitive global marketplace," said David J. Paterson, Verso's President and CEO. "We continue to face increased competition from electronic substitution for print and international producers, but as a larger, more efficient organization with a sustainable capital structure, we will be better positioned to compete effectively and deliver solid results despite the industry's continuing challenges. Furthermore, we believe the transaction provides stakeholders in both companies with meaningful, compelling value."
George F. Martin, President and CEO of NewPage, commented, "We believe this agreement with Verso represents the best way forward for our stakeholders. A combined Verso and NewPage will be able to achieve greater efficiencies, which will enable it to serve clients with a high level of product quality and innovation. Together we will have increased manufacturing efficiency, greater flexibility and an even more solid and capable platform."
The combination of the two companies is expected to result in at least $175 million of pre-tax total cost synergies, which are expected to be achieved during the first 18 months after completion of the transaction. As a result of the transaction, when compared to stand-alone Verso, the combined company will be substantially deleveraged with a pro forma debt-to-EBITDA ratio materially lower than Verso's current debt-to-EBITDA ratio.
Dave Paterson, the CEO of Verso, will lead the combined organization. At closing, Verso has agreed to appoint to its board of directors a current director of NewPage. Prior to closing, the current leadership teams of Verso and NewPage will continue to lead their respective organizations to ensure that both companies continue to provide quality products and services to their customers and to ensure completion of the proposed transaction.
Representatives from both Verso and NewPage will be chosen to comprise a team in charge of leading integration efforts on behalf of the combined company after the closing. The two companies will work together to ensure a smooth transition for their stakeholders, and their focus will be to retain the best talent from Verso and NewPage for the combined company.
Verso Paper Corp. is a leading North American producer of coated papers, including coated groundwood and coated freesheet, and specialty products.
NewPage is a leading producer of printing and specialty papers in North America with $3.1 billion in net sales for the year ended December 31, 2012. NewPage owns paper mills in Kentucky, Maine, Maryland, Michigan, Minnesota and Wisconsin. These mills have a total annual production capacity of approximately 3.5 million tons of paper.