market that went from an NSP of $788 per ton when the investment by Verso was announced in February 2018 to an NSP of $470 per ton in October 2019.7 This decision and execution plan (or lack thereof) demonstrates a fundamental lack of knowledge of domestic and global packaging markets. Despite this experience, the incumbent Board is now threatening to pursue a similar conversion project in Duluth, which is likely to cost tens of millions of dollars.
We are convinced that Verso needs oversight from new directors with extensive experience in its remaining coated paper businesses and companies undergoing operational turnaround. The election of the three Atlas director candidates will ensure that the Board has the relevant industry and operating experience to develop and execute a viable long-term strategy to operate the business at its full potential.
Industry experts agree with our assessment of Verso, as Glass Lewis voiced their “outstanding concerns that the incumbent board appears to be conducting a perpetual strategic review in lieu of an actual strategy.”8
Additionally, ERA Forest Products Research stated that based on their analysis of Verso, they “are of the opinion that Verso’s existing management has worn out its welcome. As such, investors should return theBLUE proxy card in support of the slate of directors proposed by Atlas and Blue Wolf.”9
Atlas Nominees
Based on our twenty years of successfully investing in the paper industry, we are confident Verso is capable of delivering far better performance if certain sensible operational improvements are made – the kind of improvements that the incumbent directors lacked either the ability or the inclination to deliver during the multi-year strategic review process. We believe experienced, independent and thoughtful voices with ownership perspectives on the Board like those ofTim Lowe,Sean Erwin andJeffrey Kirt will reject the status quo at Verso and deliver value to stockholders. As previously stated, all three of these director candidates are independent and would be considered so under New York Stock Exchange rules and policies, as well as under the guidelines of both leading proxy advisory firms, ISS and Glass Lewis.
We continue to struggle with Verso’s defamatory attacks on Tim Lowe. We have nominated Mr. Lowe because of his vast operating experience in the paper and pulp industry spanning almost four decades, including the graphic paper and bleached-kraft pulp markets that are most relevant for Verso. The Company has spread a false and distracting narrative of his alleged conflict, disingenuously suggesting that Verso and Twin Rivers, a company at which Mr. Lowe serves as anon-executive director, have meaningful product overlap. Verso, if an informed market participant, should know well that any overlap in products sold by Verso and Twin Rivers is de minimis at best and would no longer exist once the sale of the Specialty Mills is completed. In addition, we note that Atlas’s investments in Verso and Twin Rivers are held in different Atlas funds, each of which has separate fiduciary obligations. Further, there are safeguards in the limited partnership agreements of the funds managed by Atlas to protect against decisions or actions that may benefit one fund at the detriment of another Atlas fund and, if elected, we would expect Mr. Lowe to adhere to these safeguards and act as a director of Verso in accordance with his fiduciary obligations to Verso. At the end of the day, based on their experience and interactions with Mr. Lowe, Atlas and Blue Wolf have no doubt that Mr. Lowe would uphold his fiduciary duties on the Board of Verso and take actions consistent with such fiduciary duties - for the benefit of ALL Verso stockholders.
Stockholders should strongly question the true motivation behind the incumbent Board’s allegations about conflicts of interest relating to Mr. Lowe’s director role with Twin Rivers. This is particularly the case given that the incumbent Board has already determined by selling the Specialty Mills that the products in question are no longer a critical part of Verso’s current business and strategic plan.
However, in order to achieve improved operating results on the scale that we envision for the benefit of ALL stockholders, Verso’s board needs directors with the requisite operational and industry experience. Tim Lowe is one of those people.
Tim Lowe, along with Sean Erwin and Jeffrey Kirt, would be only three of seven directors, representing a minority of the Board. If elected, they will be expressly bound by Verso’s corporate governance guidelines and code of conduct applicable to all directors (the “Verso Policies”). We would also expect them to collaborate with there-constituted
