GREENWICH, Conn. and
NEW YORK, Jan. 21, 2020 /PRNewswire/ -- Lapetus Capital II
LLC (together with its affiliates, "Atlas"), along with other
participants in its solicitation, including BW Coated LLC (together
with its affiliates, "Blue Wolf"), the beneficial owner of
approximately 9.43% of the outstanding common stock in Verso
Corporation (NYSE: VRS, the "Company" or "Verso"), today announced
that Institutional Shareholder Services Inc. ("ISS"), a leading
proxy advisory firm advising institutional investors on voting
matters, has recommended that stockholders vote on the BLUE proxy
card in support of Atlas' and Blue Wolf's nominees, Sean Erwin and Jeffrey
Kirt. In addition, Atlas and Blue Wolf announced the
Delaware Chancery Court found that
Atlas presented facts sufficient to establish a credible basis for
the Court to infer that there may have been entrenchment motives
and possible wrongdoing affecting the strategic review process that
led to the Pixelle transaction.
ISS Recommendation
In its report recommending stockholder vote on the BLUE proxy
card in support of Atlas' and Blue Wolf's nominees, Sean Erwin and Jeffrey
Kirt, ISS highlighted a history of questionable governance
by the board of directors of Verso (the "Board"), including the
following:1
- "It is especially concerning that there was no board change
before or during the strategic alternatives process, given that
such a process can have an outsized impact on shareholders' ability
to realize value."
- "The timing of the board refreshment . . . appear[s] directly
linked to this proxy contest."
- "The company's executive succession planning looks subpar, as
shown by its CEO changes in 2019. This fact pattern calls into
question whether the company would have improved corporate
governance, absent pressure from the dissident."
- "Taken as a whole, these items indicate that additional change
at the board level is warranted."
- "Additionally, there does not appear to be a valid reason for
the company not to have held a meeting since September 2018."
ISS also commented on Verso's inadequate disclosure and
questionable capital allocation:2
- "Furthermore, its August 2019
announcement of a large, $120 million
capital investment program appeared short on details and
financially questionable, especially given the low valuation at
which Verso has historically traded."
Commenting on the relevant skills and many qualifications of
Atlas' and Blue Wolf's nominees, ISS said:3
- "The dissident's nominees have highly relevant skills and
experience. Sean Erwin has
experience as a director at two public companies and was CEO of
Neenah Paper, Inc., whose products would appear to be similar to
Verso's. Timothy Lowe was CEO of
Twin Rivers Paper Company and previously held executive and
operational roles at other paper and pulp companies.
Jeffrey Kirt brings financial
knowledge and an investor's viewpoint, as he has an extensive
background with investments in industrial companies." (Emphasis
added.)
- "The dissident nominees seem qualified to contribute industry
expertise and an investor perspective, which could better align the
board with the interests of shareholders. As such, votes for two of
the three dissident nominees, Sean
Erwin and Jeffrey Kirt, are
warranted on the dissident (BLUE) card."
Finally, commenting on Verso's proposal to ratify its recently
adopted poison pill, ISS said:4
- "While the poison pill has a one-year term, less than the
three-year threshold, and has been submitted to a shareholder vote,
its 15 percent trigger fails to meet [ISS's suggested] 20 percent
threshold. Moreover, the poison pill does not include a qualifying
offer clause. Given the concerns inherent with these features,
support for this proposal is not warranted."
Commenting on the ISS recommendations, Tim Fazio, Managing Partner of Atlas, said, "We
are gratified that ISS has recognized the many governance
shortcomings of the Board and has supported our case for change by
recommending the election of Sean
Erwin and Jeffrey Kirt. We
urge stockholders to also vote for Timothy
Lowe, who holds 'highly relevant skills and experience,' as
acknowledged by ISS."
Commenting further, Mr. Fazio said, "In our view, the addition
of these three independent voices is crucial to foster change and
unlock value at Verso. We are confident our three
highly-qualified, independent nominees will leverage their industry
and operating experience to promote the development and
implementation of a viable long-term strategy to operate and
reposition the business."
Delaware
Chancery Court Ruling
On January 17, 2020, the
Delaware Court of Chancery found
that Atlas presented facts sufficient to establish a credible basis
for the Court to infer that there may have been entrenchment
motives and possible wrongdoing affecting the strategic review
process that led to the Pixelle transaction. The Court found
a few facts most compelling, including that the compensation of the
Verso directors as an incentive to stay in office was "a logical
point." Accordingly, the court ordered Verso to produce certain
information previously sought by Atlas in its lawsuit to
investigate whether the Board engaged in wrongdoing related to the
strategic review process.
VOTE TODAY!
Now is the time to vote your shares. Atlas and Blue Wolf
encourage you to vote on the BLUE proxy card today
FOR the election of all THREE (3) of its highly-qualified
independent nominees - Timothy
Lowe, Sean Erwin and
Jeffery Kirt.
Atlas Holdings is an industrial holding company with
a portfolio of 20 companies with aggregate annual revenues of
approximately $5 billion, operating
approximately 150 facilities and employing more than 18,000 people
globally. Although we are engaged in a variety of industrial
sectors, Atlas Holdings has been successfully investing in the
pulp, paper and packaging industries since our formation in 1999,
including specifically in the subsectors in which Verso
participates — specialty paper, graphic paper, packaging paper and
pulp. We generate profits for our investors by investing in
underperforming businesses and unlocking the full potential of
those companies over the long term. Atlas Holdings has a
total of approximately $3.0 billion
of committed capital under management, including $1.7 billion in its third investment
fund.
Blue Wolf Capital Partners is a middle market
private equity firm whose partners have decades of experience
investing in and growing companies. Blue Wolf transforms
companies strategically, operationally and collaboratively.
Blue Wolf manages challenging situations and complex relationships
between businesses, customers, employees, unions and regulators to
build value for stakeholders. For over a decade Blue Wolf has
been an active investor in pulp, paper and forest products
companies with a highly successful track record. Blue Wolf
has over $1.6 billion in committed
capital.
IMPORTANT INFORMATION
On December 31, 2019, Lapetus
Capital II LLC ("Lapetus"), together with the other participants in
Lapetus' proxy solicitation (the "Participants"), filed a
definitive proxy statement and accompanying BLUE proxy card with
the Securities and Exchange Commission (the "SEC") to be used to
solicit proxies in connection with the 2019 annual meeting of
stockholders of Verso Corporation (the "Company"). LAPETUS STRONGLY
ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE DEFINITIVE
PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF
PROXIES FROM THE STOCKHOLDERS OF THE COMPANY BECAUSE THEY CONTAIN
IMPORTANT INFORMATION, INCLUDING INFORMATION ABOUT THE IDENTITY OF
THE PARTICIPANTS IN THE SOLICITATION AND A DESCRIPTION OF THEIR
DIRECT OR INDIRECT INTERESTS THEREIN. The Definitive Proxy
Statement and a form of proxy is available to stockholders of the
Company at no charge on the SEC's website at http://www.sec.gov and
is also available, without charge, on request by contacting
Lapetus' proxy solicitor Harkins
Kovler, LLC by telephone at the following numbers: 1 (212)
468-5380 (banks and brokers call collect) or toll-free at 1 (877)
339-3288.
Media Contacts:
Prosek Partners
Andrew Merrill / Brian Schaffer
646.818.9216 / 646.818.9229
amerrill@prosek.com / bschaffer@prosek.com
1 Permission to quote ISS neither sought nor
obtained. Emphasis Added.
2 Ibid.
3 Ibid.
4 Ibid.
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SOURCE Atlas Holdings LLC; Blue Wolf Capital Advisors IV,
LLC