Verso to gain $42 million in settlement with Canadian paper industry

U.S. Sen. Susan Collins, R-Maine, is praising a recent decision by the U.S. Department of Commerce that allows the Verso mill in Jay to reach a settlement with the Canadian paper industry.

Earlier this year, Verso Corp., owner of the paper mill in Jay, entered into an agreement with Canadian paper producers that might well net the company $42 million. According to a March 20 filing with the Securities and Exchange Commission, Verso struck a deal with Port Hawkesbury Paper Limited Partnership and Irving Paper Limited, both producers of glossy supercalendered paper, that could result in the return of import taxes paid by the companies. Verso could receive up to $42 million of the total return.

According to a filing with the Commerce Department, the department agreed to revoke the countervailing duty retroactively to August 2015.

“This announcement is great news for Verso and its Jay mill, a cornerstone of Franklin County’s economy, as well as for the hundreds of hardworking employees in Jay,” Collins said in a news release. “I commend the Canadians and Verso for their good faith negotiations, which will help ensure a bright future for Verso and the Jay mill, leading to greater investment and ultimately the creation of more jobs.”

A spokesperson from Verso Inc. did not respond to a request for comment Friday.

According to the news release, the duties were issued in 2015 on those specific Canadian imports; but in 2018, Verso, the last remaining U.S. producer of supercalendered paper, filed the request.

A countervailing duty is an import tax imposed on goods to prevent dumping or to counter export subsidies. In 2015 it was determined that glossy paper produced by several Canadian paper companies was being subsidized.

The import taxes the Canadian companies paid were meant to make the price of American glossy paper competitive.

Verso filed a request with the U.S. Department of Commerce to indicate its circumstances have changed to “no interest” when it comes to the glossy paper. With that request comes another for Commerce to revoke a countervailing duty order that was issued Dec. 10, 2015, that taxed the glossy paper imported from Canada by Port Hawkesbury and Irving Paper at nearly 20 percent. Specifically, Verso is asking that the order be revoked retroactively to Aug. 3, 2015.

According to a spokesperson from Verso from this spring, the tariffs were put in place to “offset the impact of Canadian subsidies paid to Canadian producers” and to help U.S. companies. “However, injurious Canadian (supercalendered) imports continue to enter the United States, even with the tariffs, and imports from other non-U.S. SC producers which are not subject to the tariffs have increased.

“These factors offset the benefits of the tariffs to Verso,” the spokesperson said.

According to the release from Collins, this will allow Verso to reinvest in domestic operations.

According to the Commerce filing, which is dated July 5, in March Verso had expressed “a lack of interest” in the existing duties enforcement and requested the revocation. It went on to say all parties agreed to the outcome.

“We will instruct U.S. Customs and Border Protection (CBP) to discontinue the suspension of liquidation and the collection of cash deposits of estimated countervailing duties, to liquidate all unliquidated entries that were entered on or after Aug. 3, 2015, without regard to countervailing duties, and to refund all CVD cash deposits on all such merchandise, with applicable interest,” the filing reads.

The order covers all supercalendered paper regardless of weight, brightness, opacity, smoothness, or grade, and whether it is in rolls or sheets.

This is positive news for the Verso mill in Jay, one of many mills in the state that had fallen on harder times in recent years. However, the Jay mill reopened its No. 3 machine, bringing back 120 jobs that had been lost earlier.

The paper machine and associated pulping capacity were idled temporarily in January 2017 and shut down in July of that year as a result of declining demand for the graphic paper products formerly produced on the machine, the company said in a news release.

Earlier this year, one of Verso’s major investors sold off more than $18 million worth of shares in the first two weeks of January, just months after expressing frustration with returns on the investment.

According to an earlier filing with the U.S. Securities and Exchange Commission, Mudrick Capital Management, L.P., a major shareholder of the Verso mill, made four transactions from Jan. 3 to Jan. 12. At the time of the sales, the price of a share had risen to nearly $17, up from a low of just over $3 a share.

Verso closed Friday at $20.89, down 0.096 percent.