Rumford Branch, RUPO / PORU

Sounding like the layoffs are going to have a real adverse affect on the railroad, which will most likely make cuts, which will affect service, which will affect the mill, which will make more cuts. And on an on. Not going to end well if the layoffs procede as planned.

That company is a bunch of crooks.

Bad month for Maine mills....

http://bangordailynews.com/2015/09/01/b ... ndefinite/" onclick="window.open(this.href);return false;

PORU videos by Robert Selberg:

https://www.youtube.com/watch?v=buH77xHkkFE" onclick="window.open(this.href);return false;

https://www.youtube.com/watch?v=XEBOmvPtdok" onclick="window.open(this.href);return false;

https://www.youtube.com/watch?v=uVQNlmDJ3TY" onclick="window.open(this.href);return false;

Rupo just passed the Mountain Branch at 10:20 am. Ten (10) engines, only 2 in Pan Am paint. These trains are going by so fast it's difficult to accurately get engine numbers when there are this many engines.
Several high side HS gons, some loaded ballast hoppers, empty gons and hoppers as well as general mixed freight.
S

That was a WAPO. RUPO typically wouldn't ever have that many engines.

I thought I heard 'RUPO' called out on the scanner, but, it could have been 'WAPO' ('WHAT???' . In any event, PORU returned past Mountain Branch early in the afternoon with only 2 Pan Am units and one yellow and black leased engine that were part of the earlier westbound train. No clue as to where the other engines were headed, most weren't familiar items and appeared to be in pretty rough shape .
S

CM&Q handed over 2 B23-7's (both would have been ATSF bluebonnet) bound for Brunswick with their coming Rockland Br. takeover, and 3 or 4 LMX gray B39-8's on their way to Larry's in Ohio, yesterday. They may have made Waterville in time to make WAPO overnight. Which could be what you saw.

Those were them...thanks for the info.
S

Verso has sold the hydro power generation assets that they own in and around Jay. They carefully noted that they did not sell power generation assets directly at the mill. Coverage here from the Bangor Daily News.

PORTLAND, Maine — Verso Corp. announced it sold four hydroelectric generators near its Androscoggin mill in Jay to a New Jersey energy investor for $62 million in cash.

Verso announced Thursday it sold subsidiary Verso Androscoggin Power LLC to Eagle Creek Renewable Energy LLC as part of the troubled papermaker’s plan to restructure and improve cash flow.

“The sale of [Verso Androscoggin Power] is expected to have no impact on the operations of the Androscoggin mill,” the company said in a news release. “The mill purchased electricity from [Verso Androscoggin Power] before the transaction, and it will continue to do so with [Verso Androscoggin Power] now under Eagle Creek’s ownership.”
...
The Sun Journal reported that two of the hydropower facilities changing hands are in Jay, one is in Livermore and a fourth is in Livermore Falls. The facilities, with about 30 megawatts of capacity, are not connected to the power grid.
...
Verso, which purchased its larger competitor NewPage for $1.4 billion last year, has faced challenges since then. In its November earnings statement, Verso said it was considering bankruptcy or selling off certain assets, including the Androscoggin Mill.

The Jay mill employed about 865 people last year, with 300 layoffs that began last year and will continue through the first quarter of 2016.
...
Verso said it would continue to own and operate its cogeneration facilities that consist of two recovery boilers, a biomass boiler, three steam turbines and three gas turbines and remains connected to the grid as a customer of Central Maine Power Co.

Sounds like most of those are old dams for Otis, which they bought when Otis closed up shop.

Thats step 1, we should start a pool here on when they close the mill. I'm gonna say by the end of 2016 AIM will own Verso-Androscoggin.

Any other takers? Sooner or later?

I think Verso is going to sell that mill to another paper company. This one is much bigger, and more modern than Bucksport. They've put a fair amount of money into paper making systems as well. I think it's competitive in a way many other mills were not.

gokeefe wrote:I think Verso is going to sell that mill to another paper company. This one is much bigger, and more modern than Bucksport. They've put a fair amount of money into paper making systems as well. I think it's competitive in a way many other mills were not.

Why, other than wishful thinking, would you trust in that belief? Bucksport wasn't floated to another mill owner at all; Verso did an immediate 'stealth' sale to the scrappers at below-market rate, and that was that. There was not so much as an opportunity given to evaluate it for other purposes, so why would a site's relative competitiveness matter to Verso? They're bad actors. And they're immune to "Well, it would be unthinkable!...so I am sure the mill will be saved" optimism. They got away with it on Bucksport because that was the prevailing local mentality, and it didn't dawn on anyone that the unthinkable was happening until it was already done.


Verso's stock is delisted, they're up to their eyeballs in debt, and its executives are openly looting the company ahead of the inevitable bankruptcy. Over the past 9 months where this nosedive has accelerated to terminal velocity they've been acting the part of a company that does not expect--nor much care--if it'll be there by the end of fiscal year 2016. They are more scrap dealer than mill owner by this point. That's why they scrap below market rate as first move.

Maybe Jay ends up different than Bucksport, but it won't be under this ownership and there has to be some evidence other than personal belief that another owner is a cinch to come in as the white knight. It's pretty well proven Verso has no @#$% to give about searching for a caretaker, and could care less about the relative quality of the facility vs. other facilities before they shoot first. So some other mechanism is going to need to be in-play here coming from outside of Verso that wasn't in-play on Bucksport to substantiate that personal belief that the plant's going to make a soft landing. This has nothing to do with Jay or paper in Maine...everything to do with Verso's and its executives' motives.


Same thing stressed in recent threads about the future of Maine railroading: forget about the view from inside Maine; this isn't a local issue at all. Focus on who is making the decisions from far outside the state and what their motives are.

...and just in case it's forgotten who we're dealing with:

http://getthatmoneyhoney.com/verso-039- ... struggles/" onclick="window.open(this.href);return false;

Last week there was news in Duluth that the big Verso paper mill there, with about 300 employees, might be sold. It’s a productive mill that has already changed hands a few times since it was built in the 1980s, but the paper industry in Minnesota has been increasingly challenging. What’s interesting is that the Duluth mill has only been part of Verso since January, when the company completed its acquisition of a competitor called NewPage Holdings. Verso was trying to respond to the continuing decline in the market for coated paper used for magazines and catalogs, off an additional 4.7 percent in the first half of this year, according to an industry research firm Verso quoted in August. Verso’s idea was to consolidate operations with another big industry player. It planned to eliminate a lot of cost, at least $175 million per year. Not even a year into the deal, Tennessee-based Verso turned out to have been far too optimistic.

Someone was either very stupid or very disingenuous that the NewPage acquisition would be what the doctor ordered.

It’s hard to imagine a traditional industrial company in any industry describing its business in filings at the Securities and Exchange Commission the way Verso just did, beginning at the very top: “Within our organization, Verso Corporation, formerly named Verso Paper Corp., is the ultimate parent entity and the sole member of Verso Paper Finance Holdings One LLC, which is the sole member of Verso Paper Finance Holdings LLC, which is the sole member of Verso Paper Holdings LLC.” Got that? Verso Corp. owns a company called Verso, which owns a company called Verso, which owns yet another company called Verso. And that one may own some paper milling assets. That first sentence makes a couple of things obvious.

One, a half-hour wasn’t nearly enough time to set aside to read this company’s latest quarterly filing. And two, Verso is less a normal operating business than a deal, a creation of some financial managers. Of course that is who put the company together, at Apollo Global Management, a large manager of private equity and other “alternative asset” funds based about a block from Central Park in New York. Apollo created Verso in 2006 to acquire the coated paper business of International Paper. Verso has been a consistent financial performer since then, in that it routinely loses money.

Got that? This isn't a paper company, it's a Frankenstein creation of vulture capital funds of considerable notoriety.

The company Verso acquired just after the first of this year, NewPage, was also a big idea of a private equity manager. NewPage’s private equity sponsor was Cerberus Capital Management, another big firm with Midtown Manhattan offices not quite a 15-minute walk from Apollo’s. Cerberus created NewPage to buy a paper business from MeadWestvaco Corp. in 2005. It later acquired the North American paper operations of the Finnish company Stora Enso, the deal that gave the company the paper mill in Duluth.

So...one vulture capital firm making a deal with another as basis for the "paper industry merger". Make that "disingenuous", not stupid.

There has been plenty of deal making since these big private equity firms pursued the paper market, but of all the deals and proposed deals there is one that stands out in the filings as a telling example of the thinking behind how these companies were put together. This transaction actually took place in 2007, when Verso took out an additional $250 million loan. It was before the financial crisis, when borrowing that kind of unsecured money from financial institutions was still possible.

In its documents for the subsequent public stock offering in 2008, one of the main uses for the money to be raised from the public shareholders was paying back much of that $250 ­million loan. What’s unusual is that the $250 million loan wasn’t taken out to buy anything productive, like new equipment. The loan proceeds went to the company owners as a distribution, a kind of a dividend.

That’s how Apollo got almost all of its money out of Verso. It’s a little like a weekend gambler going to the casino with $100 to play blackjack, winning right away and putting the $100 back in the ­wallet. Every additional hand for the rest of the night is really on the house. That distribution alone doesn’t make the Apollo managers the bad guys. It’s a reasonable objective in a private-equity deal to minimize the amount of capital put at risk. Yet it does show just who actually had a lot to lose in Verso.

Those losses are being felt by people in places like Jay, Maine, where a Verso mill will lay off hundreds, and Wickliffe, Ky., where a Verso mill is being idled. And, of course, Sartell in central Minnesota.

And what would motivate a "paper mill owner" to sell a plant for scrap before entertaining offers from another paper mill owner? Ah, yes...they aren't paper mill owners at all. They're hedge fund managers playing one-time transactional games when the market was ripe for it, then getting out before the party was over.



↑This↑ is who is making the decisions from outside of Maine about the mills in Maine. The mills themselves are irrelevant. If you want to make predictions on what's going to happen with Jay, figure out the tactical endgame for the investors who have money riding on their corporate restructuring before the bankruptcy filing.

100% correct.