Item 2.02 Results of Operations and Financial Condition.
The information contained in Item 2.05 discussing certain charges expected to be
recognized by Verso Corporation ("Verso") in the fourth quarter ended
December 31, 2020 is hereby incorporated by reference into this Item 2.02.
Item 2.05 Costs Associated with Exit or Disposal Activities.
On January 22, 2021, Verso's Board of Directors approved management's decision
to not restart its paper mill in Duluth, Minnesota (the "Duluth Mill") and to
continue with its efforts to sell the mill. This decision was made in response
to the continued accelerated decline in printing and writing paper demand
resulting from the COVID-19 pandemic. The decision to not restart the Duluth
Mill, which has been idle since July 2020, will reduce Verso's total annual
production capacity by approximately 270,000 tons of supercalendered paper.
Verso furloughed approximately 190 employees when the mill was idled in July
2020, while a smaller group of approximately 35 employees remained at the mill
to maintain critical systems.
In connection with the decision to not restart the Duluth Mill, Verso expects to
recognize approximately $5 million to $10 million in certain contract
termination and other associated charges in the fourth quarter ended
December 31, 2020. Verso expects to further reduce the number of employees
remaining at the mill by 15 to 20 and expects to recognize less than $1 million
of additional severance and related benefits charges for these employees in the
fourth quarter ended December 31, 2020. As of December 31, 2020, the Duluth Mill
had property, plant and equipment with a net book value of approximately
$75 million and store-room inventory of approximately $2 million. Verso expects
to recognize non-cash charges related to the Duluth Mill property, plant and
equipment and store-room items of approximately $65 million to $70 million in
the fourth quarter ended December 31, 2020.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description of Exhibit
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
Forward-Looking Statements
In this Current Report on Form 8-K, all statements that are not purely
historical facts are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking statements may be
identified by the words "believe," "expect," "anticipate," "project," "plan,"
"estimate," "intend," "potential" and other similar expressions. Forward-looking
statements are based on currently available business, economic, financial, and
other information and reflect management's current beliefs, expectations, and
views with respect to future developments and their potential effects on Verso
and include statements regarding the expected charges to be recognized in the
fourth quarter ended December 31, 2020, the expectations regarding the reduction
in paper production as a result of not restarting Duluth Mill, and the Company's
plans to sell Duluth Mill. Actual results could vary materially depending on
risks and uncertainties that may affect Verso and its business. Verso's actual
actions and results may differ materially from what is expressed or implied by
these statements due to a variety of factors, including those risks and
uncertainties listed from time to time in Verso's filings with the Securities
and Exchange Commission ("SEC"), including those in Verso's Annual Report on
Form 10-K for the year ended December 31, 2019 under the heading
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entitled "Risk Factors," as such risk factors may be amended, supplemented or
superseded from time to time by other reports Verso files with the SEC. Verso
assumes no obligation to update any forward-looking statement made in this
report to reflect subsequent events or circumstances or actual outcomes.
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