Verso Paper Corp. has reached an agreement to sell its Bucksport paper mill and power plant to a Canadian scrap metal recycler for $60 million.
The announcement Monday came just over two months after the company announced that it was closing the Bucksport mill and laying off the majority of its more than 500 workers. The purchase and sale agreement with AIM Development was signed Friday, a day after the final paper machine at the 84-year-old mill was silenced.
Bill Cohen, Verso Paper’s spokesman, said late Monday that the mill will be sold to the subsidiary of Montreal-based American Iron and Metal. The sale price is $60 million, according to a filing with the U.S. Securities and Exchange Commission made Monday.
“It’s another big surprise,” said Bucksport Mayor Dave Keene, who was notified about the sale at 4:30 p.m. Monday.
“We were hoping that someone would come forward and continue to operate it as a paper mill, but I don’t think Verso wants that to happen. AIM is basically a scrap metal company. They have a history of tearing things down to the ground,” said Keene, who worked at the mill for 23 years. “It’s sad, because Verso has put a lot of money into the mill to modernize it. I don’t know for certain, but it’s not looking very good for it to be reused as a paper mill.”
Because Verso is selling its power island, the sale could be delayed for up to 45 days, Cohen said, explaining that any transfer of power assets must be approved by the Federal Energy Regulatory Commission.
Cohen was uncertain how the mill will be used, and how the sale might affect the 540 employees who worked at the mill. Verso has agreed to pay those workers through Dec. 31.
Cohen has been told that AIM intends to continue operating the power island, an operation that means about 60 employees will continue to have jobs.
“We’re not sure what the rest of their plans are for the mill,” Cohen said. “We will be meeting with them over the next few days and we hope to learn more. It would be premature to speculate further.”
Walter Griesseier, a spokesman for American Iron and Metal, said in an email he was unable to comment on the sale.
The Associated Press reported that the Maine Department of Labor says state law requires that Verso issue severance pay within one regular pay period after their employment ends on Dec. 31. That means those workers would have to be paid by Jan. 8.
Emery Deabay, president of the United Steelworkers Local 1188, could not be reached for comment Monday night, but he told The Associated Press that the company wants to follow its contract with the union, which means Verso would not have to pay severance to union members for three months.
Verso intends to complete the deal with AIM Development in January. American Iron and Metal is the same company that bought a Minnesota mill from Verso last year, demolished it and then redeveloped the site.
The Bucksport mill, which made specialty coated paper, was never profitable for the Tennessee-based company. Verso officials announced in October that they intended to close the mill by year’s end, citing high energy costs and declining demand for their product.
The company also is in the midst of negotiations to buy rival NewPage Holdings in a deal that is awaiting federal approval. Industry analysts speculated that Verso would have to shed some of its excess capacity to allay antitrust concerns that the merger would give too much market control to one company.
That deal is expected to be completed by the end of the year.
The power plant operated by Verso in Bucksport has a generating capacity of 303 megawatts. It has historically provided about a quarter of the mill’s electrical needs and the rest has been sold into the state’s power grid.
Verso sold its paper mill in Sartell, Minnesota, in 2013 after an explosion and fire at the plant on Memorial Day 2012 killed one worker and caused such extensive damage that it was deemed too expensive to repair and reopen. The mill had operated for almost 110 years.
AIM purchased the site to salvage and recycle materials. The $5.1 million demolition started in the summer of 2013. The final demolition work is scheduled for January and then the site is expected to be redeveloped for another use, according to Minnesota news outlets.
“We realize that people want some certainty, but sometimes we just don’t have the answer,” Cohen said.
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