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Verso to Idle Paper Mills in Duluth and Wisconsin Rapids Due to Market Decline Caused by COVID-19

Verso's Wisconsin Rapids mill has the capacity to produce approximately 540,000 tons of paper per year. The mill makes graphic papers used in commercial printing, media and marketing applications.

June 9, 2020 - Verso Corporation (NYSE: VRS) today announced that it is taking immediate actions to offset unprecedented market decline due to the COVID-19 pandemic and to reposition the company for future success.

Verso will indefinitely idle paper mills in Duluth, Minnesota, and Wisconsin Rapids, Wisconsin, while exploring viable and sustainable alternatives for both mills, including restarting if market conditions improve, marketing for sale or closing permanently.

The decision to reduce production capacity is driven by the accelerated decline in graphic paper demand resulting from the COVID-19 pandemic. The stay-at-home orders have significantly reduced the use of print advertising in various industries, including retail, sports, entertainment and tourism. According to Fastmarkets RISI, North American printing & writing demand fell by 38% year-over-year in April, and operating rates are expected to drop well below 70% during the second quarter.

"It is critical that we maintain a healthy balance sheet and focus on cash flow, while balancing our supply of products and our customers' demand," said President and Chief Executive Officer Adam St. John. "After a comprehensive review of post-pandemic demand forecasts and capacity, we made the difficult decision to idle the Duluth and Wisconsin Rapids mills. We expect the idling of these facilities to improve our free cash flow. The sell through of inventory is expected to offset the cash costs of idling the mills."

Verso expects to idle the Duluth Mill by the end of June 2020, and the Wisconsin Rapids Mill by the end of July 2020, resulting in the layoff of approximately 1,000 employees. Verso will continue to supply graphic and specialty papers in roll and sheet form, as well as packaging papers and pulp.

"Decisions to idle facilities are always difficult because they impact employees, their families, and communities," said St. John. "Verso is committed to treating all of our affected employees with fairness and respect. As always, safety is our highest priority and will be our primary focus during this difficult time."

About Verso's Paper Mills

Verso operates four mills with a combined production capacity of 1.97 million tons of paper per year. The mills include:

Duluth Mill
The Duluth Mill has the capacity to produce approximately 270,000 tons of paper per year. The mill makes graphic papers used for magazines, catalogs and retail inserts and packaging recycled kraft paper used for a variety of bag, sack and converting applications.

Wisconsin Rapids Mill
The Wisconsin Rapids Mill has the capacity to produce approximately 540,000 tons of paper per year. The mill makes graphic papers used in commercial printing, media and marketing applications, including magazines, catalogs, books, direct mail, corporate collateral and retail inserts and packaging papers used in point-of-purchase displays and laminated paperboard for box packaging.

Escanaba Mill
The Escanaba Mill (Michigan) has the capacity to produce approximately 730,000 tons of paper per year. The mill produces graphic papers used in commercial printing, media and marketing applications, including magazines, catalogs, books, direct mail, corporate collateral and specialty papers used in label and converting applications.

Quinnesec Mill
The Quinnesec Mill (Michigan) has the capacity to produce approximately 430,000 tons of paper per year. The mill produces graphic papers used primarily in marketing applications, including magazines, catalogs and commercial printing, and makes some of the most consistently high quality hi-maple hardwood kraft market pulp in the industry.

Verso Corporation is the leading North American producer of coated papers, which are used primarily in commercial print, magazines, catalogs, high-end advertising brochures and annual reports, among other media and marketing publications. The company produces a wide range of products, ranging from coated freesheet and coated groundwood, to specialty papers, packaging papers, inkjet and digital papers, supercalendered papers and uncoated freesheet. Verso also produces and sells bleached and unbleached market kraft pulp, which is used to manufacture paper and packaging products.

Verso operates seven paper machines at four mills located in Michigan, Minnesota and Wisconsin with a total annual production capacity of approximately 1,970,000 tons of paper. For further information, visit: versoco.com.

SOURCE: Verso Corporation