Verso Paper to shut Minnesota plant

Thu Aug 2, 2012 6:39pm EDT

* Closure will result in $114 mln charges

* To realize charges in Q3

* Shutdown to reduce annual capacity by 20 pct

Aug 2 (Reuters) - Verso Paper Corp said it will shutdown its destroyed paper mill in Minnesota, considering the length of time it would take to rebuild the mill structures and systems.

The closure will result in a pre-tax charge to earnings of about $114 million, which includes severance and other shutdown costs, during the third quarter.

"Decision to permanently close the mill will have a significant impact on many people across this region, especially our Sartell Mill employees," Verso said in a statement.

The company said the permanent closure of the mill will reduce its annual coated groundwood capacity by 180,000 tons, or about 20 percent.

Explosion and fire at its paper mill in Sartell, Minnesota, on May 28 claimed the life of one employee and injured four others. About 5,000 tons of finished paper and work-in-process inventory was destroyed due to the fire.

The decision to permanently shut the mill also comes amid rising costs of key raw materials, such as recycled fibre and energy, and lower demand from China.

Verso said last October it would cut 300 jobs and shut down three paper machines to reduce its annual production capacity by 11 percent.

Shares of the Memphis, Tennessee-based company closed at $1.45 on Thursday on the New York Stock Exchange.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.