Despite the sale, Smart Papers is going ahead with the opening of its $30 million co-generation plant, a project it launched last year. The co-generation system will produce 40 megawatts of electricity, enough to power its mills with some surplus it will sell to other consumers. The new plant uses biomass fuel created from yard, industrial, and fiber waste, and Smart Papers may eventually find itself as a supplier of biomass fuel as well as paper.
Of these three coated paper producers, Memphis, Tenn.-based Verso Paper Corp. was the last created—via a spin-off from International Paper—and produces papers primarily for the offset and gravure markets, perhaps the most hard hit by market shifts. The company went public a year ago, offering 14 million shares at $12 per share. In its fourth-quarter report issued early this month, Verso saw sales of its coated paper products decline by 27 percent over 2008. The company's losses totaled $33.56 million for the year, compared to a loss of $8.05 million for 2007. Verso has suspended dividend payments for the fourth quarter, but said it will re-evaluate this issue over this year.
"We have prepared ourselves for a challenging 2009 and have taken appropriate actions, including salary freezes, SG&A reductions, workforce planning improvements, and new product opportunities," said Mike Jackson, Verso's president and CEO. "Nonetheless, we expect first-quarter 2009 earnings to be sequentially down from fourth-quarter 2008 levels."
Coated papers remains one of the most difficult segments for the mills in terms of profitability. Although NewPage is pitching to the digital market, this was a tactic Smart Papers has tried with only limited success. The demand for coated papers simply isn't growing, and an uncertain economic environment doesn't help.
Jeanette Clinkunbroomer, a freelance writer, can be reached at Jclink@aol.com.