Schedule 13D Amendment No. 4

NUMBER OF

SHARES

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON

WITH

SOLE VOTING POWER

0

SHARED VOTING POWER

149,568 ⁽¹⁾

SOLE DISPOSITIVE POWER

0

SHARED DISPOSITIVE POWER

149,568 ⁽¹⁾

0001193125-19-304954.txt : 20191203 0001193125-19-304954.hdr.sgml : 20191203 20191203101034 ACCESSION NUMBER: 0001193125-19-304954 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20191203 DATE AS OF CHANGE: 20191203 GROUP MEMBERS: ANDREW M. BURSKY GROUP MEMBERS: ATLAS CAPITAL GP II LP GROUP MEMBERS: ATLAS CAPITAL GP III LP GROUP MEMBERS: ATLAS CAPITAL RESOURCES GP II LLC GROUP MEMBERS: ATLAS CAPITAL RESOURCES GP III LLC GROUP MEMBERS: ATLAS CAPITAL RESOURCES II LP GROUP MEMBERS: ATLAS CAPITAL RESOURCES III LP GROUP MEMBERS: LAPETUS CAPITAL III LLC GROUP MEMBERS: TIMOTHY J. FAZIO SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Verso Corp CENTRAL INDEX KEY: 0001421182 STANDARD INDUSTRIAL CLASSIFICATION: PAPER MILLS [2621] IRS NUMBER: 753217389 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-84029 FILM NUMBER: 191264806 BUSINESS ADDRESS: STREET 1: 8540 GANDER CREEK DRIVE CITY: MIAMISBURG STATE: OH ZIP: 45342 BUSINESS PHONE: (877) 855-7243 MAIL ADDRESS: STREET 1: 8540 GANDER CREEK DRIVE CITY: MIAMISBURG STATE: OH ZIP: 45342 FORMER COMPANY: FORMER CONFORMED NAME: Verso Paper Corp. DATE OF NAME CHANGE: 20071213 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Lapetus Capital II LLC CENTRAL INDEX KEY: 0001765298 IRS NUMBER: 475472593 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 100 NORTHFIELD STREET CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 203 622 9138 MAIL ADDRESS: STREET 1: 100 NORTHFIELD STREET CITY: GREENWICH STATE: CT ZIP: 06830 SC 13D/A 1 d829644dsc13da.htm SCHEDULE 13D AMENDMENT NO. 4 Schedule 13D Amendment No. 4

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934*

(Amendment No. 4)*

Verso Corporation

(Name of Issuer)

Class A Common Stock, par value $0.01 per share

(Title of Class of Securities)

92531L207

(CUSIP Number of Class of Securities)

Michael O’Donnell, Esq.

Atlas FRM LLC

100 Northfield Street

Greenwich, Connecticut 06830

Telephone: (203) 622-9138

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

Copies to:

Steven A. Seidman, Esq.

Mark A. Cognetti, Esq.

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, NY 10019-6099

(212) 728-8000

December 3, 2019

(Date of Event which Requires Filing of this Schedule)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box: ☐

NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 240.13d-7 for other parties to whom copies are to be sent.

*	The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

SCHEDULE 13D


CUSIP No. 92531L207		Page 2 of 16 Pages


1		NAME OF REPORTING PERSON Lapetus Capital II LLC
2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☐ (b) ☒
3		SEC USE ONLY
4		SOURCE OF FUNDS AF
5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ☐
6		CITIZENSHIP OR PLACE OF ORGANIZATION Delaware

(1)	The reporting person expressly disclaims beneficial ownership with respect to any shares of Common Stock (as defined below) of the Issuer other than the common stock of the Issuer owned directly by such reporting person.

(2)	All percentages of Common Stock (as defined below) outstanding contained herein are based on 34,704,367 shares of Common Stock outstanding as of October 31, 2019, according to the Form 10-Q filed by the Issuer with the SEC on November 12, 2019.

SCHEDULE 13D


CUSIP No. 92531L207		Page 3 of 16 Pages


1		NAME OF REPORTING PERSON Atlas Capital Resources II LP
2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☐ (b) ☒
3		SEC USE ONLY
4		SOURCE OF FUNDS WC
5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ☐
6		CITIZENSHIP OR PLACE OF ORGANIZATION Delaware

(1)	The reporting person expressly disclaims beneficial ownership with respect to any shares of Common Stock (as defined below) of the Issuer other than the common stock of the Issuer owned directly by such reporting person.

(2)	All percentages of Common Stock (as defined below) outstanding contained herein are based on 34,704,367 shares of Common Stock outstanding as of October 31, 2019, according to the Form 10-Q filed by the Issuer with the SEC on November 12, 2019.

SCHEDULE 13D


CUSIP No. 92531L207		Page 4 of 16 Pages


1		NAME OF REPORTING PERSON Atlas Capital GP II LP
2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☐ (b) ☒
3		SEC USE ONLY
4		SOURCE OF FUNDS N/A
5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ☐
6		CITIZENSHIP OR PLACE OF ORGANIZATION Delaware

(1)	The reporting person expressly disclaims beneficial ownership with respect to any shares of Common Stock (as defined below) of the Issuer other than the common stock of the Issuer owned directly by such reporting person.

(2)	All percentages of Common Stock (as defined below) outstanding contained herein are based on 34,704,367 shares of Common Stock outstanding as of October 31, 2019, according to the Form 10-Q filed by the Issuer with the SEC on November 12, 2019.

SCHEDULE 13D


CUSIP No. 92531L207		Page 5 of 16 Pages


1		NAME OF REPORTING PERSON Atlas Capital Resources GP II LLC
2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☐ (b) ☒
3		SEC USE ONLY
4		SOURCE OF FUNDS N/A
5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ☐
6		CITIZENSHIP OR PLACE OF ORGANIZATION Delaware

(1)	The reporting person expressly disclaims beneficial ownership with respect to any shares of Common Stock (as defined below) of the Issuer other than the common stock of the Issuer owned directly by such reporting person.

(2)	All percentages of Common Stock (as defined below) outstanding contained herein are based on 34,704,367 shares of Common Stock outstanding as of October 31, 2019, according to the Form 10-Q filed by the Issuer with the SEC on November 12, 2019.

SCHEDULE 13D


CUSIP No. 92531L207		Page 6 of 16 Pages


1		NAME OF REPORTING PERSON Lapetus Capital III LLC
2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☐ (b) ☒
3		SEC USE ONLY
4		SOURCE OF FUNDS AF
5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ☐
6		CITIZENSHIP OR PLACE OF ORGANIZATION Delaware

(1)	The reporting person expressly disclaims beneficial ownership with respect to any shares of Common Stock (as defined below) of the Issuer other than the common stock of the Issuer owned directly by such reporting person.

(2)	All percentages of Common Stock (as defined below) outstanding contained herein are based on 34,704,367 shares of Common Stock outstanding as of October 31, 2019, according to the Form 10-Q filed by the Issuer with the SEC on November 12, 2019.

SCHEDULE 13D


CUSIP No. 92531L207		Page 7 of 16 Pages


1		NAME OF REPORTING PERSON Atlas Capital Resources III LP
2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☐ (b) ☒
3		SEC USE ONLY
4		SOURCE OF FUNDS WC
5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ☐
6		CITIZENSHIP OR PLACE OF ORGANIZATION Delaware

(1)	The reporting person expressly disclaims beneficial ownership with respect to any shares of Common Stock (as defined below) of the Issuer other than the common stock of the Issuer owned directly by such reporting person.

(2)	All percentages of Common Stock (as defined below) outstanding contained herein are based on 34,704,367 shares of Common Stock outstanding as of October 31, 2019, according to the Form 10-Q filed by the Issuer with the SEC on November 12, 2019.

SCHEDULE 13D


CUSIP No. 92531L207		Page 8 of 16 Pages


1		NAME OF REPORTING PERSON Atlas Capital GP III LP
2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☐ (b) ☒
3		SEC USE ONLY
4		SOURCE OF FUNDS N/A
5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ☐
6		CITIZENSHIP OR PLACE OF ORGANIZATION Delaware

(1)	The reporting person expressly disclaims beneficial ownership with respect to any shares of Common Stock (as defined below) of the Issuer other than the common stock of the Issuer owned directly by such reporting person.

(2)	All percentages of Common Stock (as defined below) outstanding contained herein are based on 34,704,367 shares of Common Stock outstanding as of October 31, 2019, according to the Form 10-Q filed by the Issuer with the SEC on November 12, 2019.

SCHEDULE 13D


CUSIP No. 92531L207		Page 9 of 16 Pages


1		NAME OF REPORTING PERSON Atlas Capital Resources GP III LLC
2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☐ (b) ☒
3		SEC USE ONLY
4		SOURCE OF FUNDS N/A
5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ☐
6		CITIZENSHIP OR PLACE OF ORGANIZATION Delaware

(1)	The reporting person expressly disclaims beneficial ownership with respect to any shares of Common Stock (as defined below) of the Issuer other than the common stock of the Issuer owned directly by such reporting person.

(2)	All percentages of Common Stock (as defined below) outstanding contained herein are based on 34,704,367 shares of Common Stock outstanding as of October 31, 2019, according to the Form 10-Q filed by the Issuer with the SEC on November 12, 2019.

SCHEDULE 13D


CUSIP No. 92531L207		Page 10 of 16 Pages


1		NAME OF REPORTING PERSON Andrew M. Bursky
2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☐ (b) ☒
3		SEC USE ONLY
4		SOURCE OF FUNDS N/A
5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ☐
6		CITIZENSHIP OR PLACE OF ORGANIZATION United States

(1)	The reporting person expressly disclaims beneficial ownership with respect to any shares of Common Stock (as defined below) of the Issuer other than the common stock of the Issuer owned directly by such reporting person.

(2)	All percentages of Common Stock (as defined below) outstanding contained herein are based on 34,704,367 shares of Common Stock outstanding as of October 31, 2019, according to the Form 10-Q filed by the Issuer with the SEC on November 12, 2019.

SCHEDULE 13D


CUSIP No. 92531L207		Page 11 of 16 Pages


1		NAME OF REPORTING PERSON Timothy J. Fazio
2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☐ (b) ☒
3		SEC USE ONLY
4		SOURCE OF FUNDS N/A
5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ☐
6		CITIZENSHIP OR PLACE OF ORGANIZATION United States

(1)	The reporting person expressly disclaims beneficial ownership with respect to any shares of Common Stock (as defined below) of the Issuer other than the common stock of the Issuer owned directly by such reporting person.

(2)	All percentages of Common Stock (as defined below) outstanding contained herein are based on 34,704,367 shares of Common Stock outstanding as of October 31, 2019, according to the Form 10-Q filed by the Issuer with the SEC on November 12, 2019.

This Amendment No. 4 (“Amendment No. 4”) amends the Schedule 13D filed on September 20, 2019, (the “Original Schedule 13D”), as amended by Amendment No. 1 to the Schedule 13D filed on October 1, 2019 (“Amendment No. 1”), Amendment No. 2 to the Schedule 13D filed on October 10, 2019 (“Amendment No. 2”) and Amendment No. 3 to the Schedule 13D filed on October 24, 2019 (“Amendment No. 3” and the Original Schedule 13D, as amended, the “Schedule 13D”), and relates to Class A common stock, par value $0.01 per share (“Common Stock”), of Verso Corporation (the “Issuer”). The Schedule 13D remains in full force and effect, except as specifically amended by this Amendment No. 4. Capitalized terms used but not otherwise defined shall have the respective meanings ascribed to such terms in the Schedule 13D.

Item 2.

Identity and Background

Item 2(a)(i) of the Schedule 13D is hereby amended and restated as follows:

“(i) Lapetus Capital II LLC, a Delaware limited liability company (“Lapetus II”). Lapetus II is the direct record owner of 100 shares of Common Stock of the Issuer, and direct beneficial owner of 146,468 shares of Common Stock of the Issuer;”

Item 3.

Source and Amount of Funds or Other Consideration

Item 3 of the Schedule 13D is hereby amended and restated as follows:

The 2,330,683 shares of Common Stock beneficially owned in the aggregate by the Reporting Persons were acquired in open market transactions. The Reporting Persons expended an aggregate of approximately $33.2 million to acquire the 2,330,683 shares of Common Stock reported as beneficially owned by them in this Schedule 13D, which purchases were made in part with working capital from capital contributions and/or funds from lines of credit in the ordinary course of business of certain of the Reporting Persons. No part of the purchase price is or will be represented by funds or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding, trading or voting the securities.

Item 4. Purpose of Transaction

Item 4 of this Schedule 13D is hereby amended to include the following:

On December 3, 2019, Atlas Holdings LLC and Blue Wolf Capital Advisors IV, LLC, on behalf of Lapetus II and BW Coated LLC, delivered a letter to the Board of Directors of the Issuer (the “December 3 Letter”) and subsequently issued a joint press release enclosing the December 3 Letter. A copy of the Press Release containing the full text of the December 3 Letter is incorporated by reference and attached hereto as Exhibit 99.8.

Item 5. Interest in Securities of the Issuer

Items 5 (a) and (b) of the Schedule 13D are hereby amended and restated as follows:

In the aggregate, the Reporting Persons beneficially own, as of the date hereof, 2,330,683 shares of Common Stock, representing 6.72% of the outstanding shares. This amount includes 100 shares of Common Stock held in record by Lapetus II.

(i) Lapetus II has shared voting and dispositive power over 149,568 shares of Common Stock, including 100 shares of Common Stock held in record by Lapetus II, representing 0.43% of the outstanding shares;

(ii) ACR II has shared voting and dispositive power of 149,568 shares, in the aggregate, of Common Stock beneficially owned and held directly by Lapetus II, representing 0.43% of the outstanding shares;

(iii) AC GP II, by virtue of its status as the general partner of ACR II and certain other funds, has shared voting and dispositive power of 149,568 shares of Common Stock, representing 0.43% of the outstanding shares;

(iv) ACR GP II, by virtue of its status as the general partner of AC GP II, has shared voting and dispositive power of 149,568 shares of Common Stock, representing 0.43% of the outstanding shares;

(v) Lapetus III has shared voting and dispositive power over 2,181,115 shares of Common Stock, representing 6.29% of the outstanding shares;

(vi) ACR III has shared voting and dispositive power of 2,181,115 shares of Common Stock beneficially owned by Lapetus III, representing 6.29% of the outstanding shares;

(vii) AC GP III, by virtue of its status as the general partner of ACR III and certain other funds, has shared voting and dispositive power of 2,181,115 shares of Common Stock, representing 6.29% of the outstanding shares;

(viii) ACR GP III, by virtue of its status as the general partner of AC GP III, has shared voting and dispositive power of 2,181,115 shares of Common Stock, representing 6.29% of the outstanding shares;

(ix) each of Messrs. Bursky and Fazio, by virtue of his status as a manager and Managing Partner of ACR GP II and ACR GP III, has shared voting and dispositive power of 2,330,683 shares of Common Stock, representing 6.72% of the outstanding shares.

Each of the Reporting Persons expressly disclaims beneficial ownership with respect to any shares of Common Stock of the Issuer other than the Common Stock of the Issuer owned directly by such Reporting Person.

By virtue of the agreements and arrangements among the Reporting Persons and the Blue Wolf Persons described in this Schedule 13D, the Reporting Persons may be deemed members of a “group” (within the meaning of Rule 13d-5 under the Act) with the Blue Wolf Persons. Blue Wolf Capital Partners LLC, BW Coated LLC, Blue Wolf Capital Fund IV, L.P., Blue Wolf Capital Advisors IV, L.P., Blue Wolf Capital Advisors IV LLC and Adam Blumenthal (collectively, the “Blue Wolf Persons”) are filing a separate Schedule 13D reporting beneficial ownership of shares of Common Stock. Each of the Reporting Persons is responsible only for the information contained in this Schedule 13D and assumes no responsibility for information contained in any Schedule 13D or any amendment thereto filed by the Blue Wolf Persons. The security interests reported in this Schedule 13D do not include security interests owned by the Blue Wolf Persons. If the Reporting Persons and the Blue Wolf Persons are deemed to have formed a “group” (within the meaning of Rule 13d-5 under the Act), as of December 3, 2019 such group may be deemed to beneficially own an aggregate of 3,107,573 shares of Common Stock for the purpose of Rule 13d-3 under the Act, which would constitute approximately 8.96% of the issued and outstanding shares of Common Stock based on 34,704,367 shares of Common Stock outstanding as of October 31, 2019, according to the Form 10-Q filed by the Issuer with the SEC on November 12, 2019. The Reporting Persons expressly disclaim beneficial ownership of any shares of Common Stock or other securities held by the Blue Wolf Persons.

Item 5(c) of the Schedule 13D is hereby supplemented with the following:

Set forth on Schedule I hereto is a description of transactions with respect to the Common Stock effected by the Reporting Persons since October 22, 2019 through November 15, 2019. All such transactions were effected in the open market, and per share prices do not include any commissions paid in connection with such transactions. Except as set forth on Schedule I, none of the persons named in response to paragraph (a) has effected any transaction in the Common Stock since November 15, 2019.

Item 7.

Material to be Filed as Exhibits


99.8		Press Release by Atlas Holdings LLC and Blue Wolf Capital Advisors IV, LLC issued on December 3, 2019 containing the full text of the Letter to the Board of Directors of the Issuer, dated as of December 3, 2019.

[Signatures on following page]

SIGNATURES

After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.


Dated: December 3, 2019	Lapetus Capital II LLC

	By:	/s/ Timothy J. Fazio
	Name:	Timothy J. Fazio
	Title:	Vice President

Dated: December 3, 2019	Atlas Capital Resources II LP

		By: Atlas Capital GP II LP, its general partner

		By: Atlas Capital Resources GP II LLC, its general partner

	By:	/s/ Timothy J. Fazio
	Name:	Timothy J. Fazio
	Title:	Managing Partner

Dated: December 3, 2019	Atlas Capital GP II LP

		By: Atlas Capital Resources GP II LLC, its general partner

	By:	/s/ Timothy J. Fazio
	Name:	Timothy J. Fazio
	Title:	Managing Partner

Dated: December 3, 2019	Atlas Capital Resources GP II LLC

	By:	/s/ Timothy J. Fazio
	Name:	Timothy J. Fazio
	Title:	Managing Partner

Dated: December 3, 2019	Lapetus Capital III LLC

	By:	/s/ Timothy J. Fazio
	Name:	Timothy J. Fazio
	Title:	Vice President


Dated: December 3, 2019	Atlas Capital Resources III LP

		By: Atlas Capital GP II LP, its general partner

		By: Atlas Capital Resources GP II LLC, its general partner

	By:	/s/ Timothy J. Fazio
	Name:	Timothy J. Fazio
	Title:	Managing Partner

Dated: December 3, 2019	Atlas Capital GP III LP

		By: Atlas Capital Resources GP II LLC, its general partner

	By:	/s/ Timothy J. Fazio
	Name:	Timothy J. Fazio
	Title:	Managing Partner

Dated: December 3, 2019	Atlas Capital Resources GP III LLC

	By:	/s/ Timothy J. Fazio
	Name:	Timothy J. Fazio
	Title:	Managing Partner

Dated: December 3, 2019	/s/ Andrew M. Bursky
	Andrew M. Bursky

Dated: December 3, 2019	/s/ Timothy J. Fazio
	Timothy J. Fazio

SCHEDULE I


Reporting Person	Trade Date		Shares Purchased (Sold)			Price
Lapetus Capital II LLC		11/13/2019		(39,596	)	$	18.8315	(1)
Lapetus Capital II LLC		11/14/2019		(103,340	)	$	18.2157	(2)
Lapetus Capital II LLC		11/15/2019		(112,500	)	$	18.6439	(3)

(1)

The reported price is a weighted average price. These shares were traded in multiple transactions at prices ranging from $18.65 to $19.07. The Reporting Persons undertake to provide the Staff, upon request, full information regarding the number of shares traded at each separate price within the ranges set forth in this footnote.

(2)

The reported price is a weighted average price. These shares were traded in multiple transactions at prices ranging from $18.00 to $18.85. The Reporting Persons undertake to provide the Staff, upon request, full information regarding the number of shares traded at each separate price within the ranges set forth in this footnote.

(3)

The reported price is a weighted average price. These shares were traded in multiple transactions at prices ranging from $18.34 to $18.97. The Reporting Persons undertake to provide the Staff, upon request, full information regarding the number of shares traded at each separate price within the ranges set forth in this footnote.

EX-99.8 2 d829644dex998.htm EX-99.8 EX-99.8

Exhibit 99.8

Atlas Holdings and Blue Wolf Capital Issue Letter to Verso Corporation Board of Directors

Greenwich, CT and New York, NY – December 3, 2019 – Atlas Holdings LLC (“Atlas”) and Blue Wolf Capital Advisors IV, LLC (“Blue Wolf”) today issued the following letter to the Board of Directors of Verso Corporation (NYSE: VRS):

December 3, 2019

Board of Directors of Verso Corporation

Verso Corporation

8450 Gander Creek Drive

Miamisburg, Ohio 45342

Lady and Gentlemen:

On behalf of Lapetus Capital II LLC (“Lapetus”, and together with its affiliates, “Atlas”) and BW Coated LLC (“BW Coated” and together with its affiliates, “Blue Wolf”), we are writing in reaction to your recent earnings release, your announcement to sell the Stevens Point and Androscoggin mills (collectively the “Specialty Mills”) and your announcement regarding your annual meeting to be held on January 21, 2020. Atlas currently owns 2,330,683 shares of common stock of Verso Corporation (“Verso” or the “Company”), representing approximately 6.72% of the outstanding shares. BW Coated owns 776,890 shares of common stock of the Company, representing approximately 2.24% of the outstanding shares. Together, we own 3,107,573 shares (or approximately 8.96% of the outstanding shares) and, as such, we are, collectively, among the largest stockholders of the Company.

Background on Atlas and Blue Wolf

Atlas Holdings LLC (www.atlasholdingsllc.com) is an industrial holding company that owns 20 companies that operate approximately 150 facilities globally, generate revenues of approximately $5 billion annually and employ more than 18,000 people. Atlas is engaged in a variety of industrial sectors and 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. Atlas invests in underperforming and challenged businesses and we unlock the full potential of our companies by patiently applying our industry expertise and operating system over the long-term. Our operating system drives performance excellence by:

•

empowering our associates and aligning our interests with them;

•

focusing on industrial safety and hygiene and continuous improvement;

•

investing in high return capital projects and avoiding non-productive capital projects;

•

engaging constructively with all stakeholders, including the communities in which we operate and the unions that represent our associates; and

•

communicating transparently with all constituents who are stakeholders in our businesses.

Atlas 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 LLC (www.bluewolfcapital.com) is a middle market private equity firm whose partners have decades of experience investing in and growing companies. Leading by experience, and with a commitment to excellence, Blue Wolf transforms companies strategically, operationally and collaboratively. Blue Wolf manages challenging situations and complex relationships between business, 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. Headquartered in New York City, Blue Wolf has over $1.6 billion in committed capital and has substantial liquidity through its current $540 million investment fund, Blue Wolf Capital Fund IV, L.P.

Together, Atlas and Blue Wolf have been owners of, and instrumental in the management of numerous companies in the paper, pulp and packaging industries. Atlas and Blue Wolf successfully invested in and “turned-around” Northern Resources Nova Scotia Corporation, a softwood kraft pulp mill, Finch Paper, an integrated pulp and graphic paper mill, and Twin Rivers Paper Company, a specialty paper, graphic paper and kraft paper manufacturer. In each case, under our ownership we have significantly improved financial and operating performance. Atlas and Blue Wolf successfully exited their investment in Northern Resources and continue to own and operate Finch Paper and Twin Rivers, both of which have grown materially through well-priced and synergistic acquisitions.

In addition, for 17 years, Atlas successfully owned and operated Forest Resources, a diversified packaging manufacturer that produced corrugating medium, corrugated boxes, clay coated recycled boxboard and folding cartons. Atlas currently also owns Iconex, a leading provider of receipt, label, imaging and other products for businesses globally and Millar Western, an integrated forest products company that produces and markets softwood and hardwood pulp and softwood lumber.

We have extensive industry experience and ownership perspectives and are long-term stockholders of the Company, having initiated our investment in Verso on November 14, 2017 – over two years ago. During this time, we have proposed multiple different strategic investments and corporate governance enhancements with respect to the Company and have repeatedly engaged in dialogue with the Company, its advisors and with certain members of the Board. Consequently, the substance of this letter should not surprise you.

Sale of Specialty Mills

We are pleased that the Company has put forth the sale of the Specialty Mills to Pixelle Specialty Solutions LLC (“Pixelle”) for consideration by the stockholders. It has been obvious to us for some time that Verso could unlock value for stockholders by either: (i) selling the Specialty Mills, (ii) segment reporting the Specialty Mills so investors could properly conduct a “sum of the parts” valuation, and/or (iii) growing the Specialty Mills through the acquisition of other synergistic assets that produce high value substrates for growing markets.

It is disappointing that it took the Company more than two years to execute such a straightforward strategy since announcing its first pursuit of “strategic alternatives” on September 21, 2017. We believe that execution of any strategic alternatives to increase stockholder value has been hampered by a lack of industry expertise at the Board level and misalignment of management and the Board (as just one example, you have changed the CEO of the business three times in as many years).

We believe that Stevens Point, one of the Specialty Mills, is the “crown jewel” of Verso. Consequently, stockholders should expect full value for this asset. We are concerned that the Board has elected to enter into this transaction out of desperation and in an effort to further entrench themselves rather than to create long-term value for the stockholders. We and other owners of Verso need more information about the proposed sale than you have shared to understand its real value for stockholders.

For example, in evaluating the proposed sale of the Specialty Mills to Pixelle, we need to better understand (i) certain material terms relating to the transaction (described below), (ii) how you intend to apply the proceeds and (iii) your “value creation” strategy with the remaining pulp and graphic paper business (the “Remaining Business”). The following are questions and concerns we expect the Company to address:

Purchase Price of the Specialty Mills. The Company reported a “headline price” of $400 million, yet reported anticipated net proceeds are only be $336 million (after being reduced by $35 million of assumed pension liabilities, working capital adjustments and transaction expenses). We would like to understand in detail the $29 million difference between the anticipated net proceeds of $336 million (as reported by the Company), and the $365 million of net proceeds that should remain available after the assumption of the $35 million of pension liabilities by Pixelle. This disclosure should include the anticipated working capital adjustment and estimated transaction expenses.

For a transaction of this size, this difference represents a massive gap between the gross purchase price and net proceeds and leaves the impression of “false” advertising, or at the very least, inadequate disclosure. Moreover, the “advertised” headline price of $400 million is also misleading, considering that it includes $35 million of pension liabilities that Pixelle is assuming, which should not be looked at as the equivalent of purchase price because such liabilities will be funded by the buyer over time. Assuming a 10% discount rate and that such liabilities are funded over 10 years, the present value of the pension liability assumption component of purchase price is approximately $13.7 million. Additionally, we note that the Company reported that it has agreed to contribute an additional $54 million into the pension plan from the net proceeds of $336 million. We would like to understand anticipated go forward contributions to the pension plan after giving effect of the transaction and the $54 million of supplemental contributions.

Adding further confusion to the merits of the transaction, the Company also reported that the LTM EBITDA of the Specialty Mills was $47 million. We would like to know if the EBITDA of the Specialty Mills is before or after corporate allocation, and if it is after corporate allocation, we would like to understand the amount of corporate allocation and how the Company plans to eliminate those costs (and associated restructuring charges) after closing if Pixelle does not assume such costs. Lastly, we would like the Company to provide stockholders with the mill level financial statements for Stevens Point and Androscoggin.

Pulp Supply Contract. Verso reported that it will enter into a four-year pulp supply agreement with Pixelle (extendable for another four years at the option of Pixelle). We believe this pulp supply contract could have a material impact on the profitability and operating flexibility of the Remaining Business. Without full disclosure of the terms of this contract, we cannot properly assess the attractiveness of the Specialty Mills transaction.

Restructuring Agreement. The Company also reported entering into a Restructuring Agreement with Verso Androscoggin LLC (the “Restructuring Agreement”) to among other things, transfer certain assets and liabilities related to the business conducted at the Specialty Mills to Verso Androscoggin LLC prior to the closing of the Transaction (the “Restructuring”). Without full disclosure of the terms of the Restructuring Agreement and the Restructuring, we cannot properly assess the attractiveness of the Specialty Mills transaction.

Use of Proceeds. We would like Verso to commit to return all of the reported approximately $282 million of net proceeds to stockholders (after its agreed upon contribution to the pension plan of $54 million) from the sale of the Specialty Mills. We find it quite disconcerting that the Company will not commit to a use of proceeds prior to the stockholder vote on the transaction. We are deeply concerned about Verso squandering the proceeds by investing in capital projects to convert the Remaining Assets to produce packaging papers, including the conversion project at Duluth, or in other poorly conceived projects, acquisitions or other initiatives. We believe that poor decision-making regarding capital projects by the Verso Board has been a source of value destruction in the recent past.

Specifically, we are very concerned by the Board’s lack of transparency both with respect to the expected use of proceeds from the sale of the Specialty Mills and the results of the Androscoggin conversion project, a project the merits of which seem dubious to us. We remain troubled by the Board’s decision to pursue and invest in the Androscoggin project in 2018, a time when many other paper companies both in North America and globally had already announced or had completed conversion projects to enable graphic paper machines to produce containerboard and other packaging grades (“A3 Packaging Grades”). The resulting increase in domestic and global capacity, which was not terribly difficult to forecast, suggests that the timing of the Board’s decision to pursue this project was particularly poor. We believe that this market is now oversupplied both domestically and globally, with additional capacity coming online over the next couple of years. Further, from the time of the Company’s announcement of its plans to pursue the conversion project at Androscoggin in February 2018 through October of 2019, the export linerboard index (which we believe is a good proxy for A3 Packaging Grades) into southern Europe has collapsed from $788 per ton to $470 per ton. We understand that these pricing declines and weakness are expected to persist, further suggesting the poor timing of pursuing the conversion project at Androscoggin. We are also troubled by the decision to pursue the Androscoggin conversion project in light of the fact that the Company does not own plants to consume its A3 Packaging Grades (or otherwise have significant long term contracts with plants that do). Manufacturers of packaging grades are generally highly integrated (i.e., they own converting plants to consume their paper or have long-term contracts with converters), which allows them to avoid selling significant volumes in the “spot” market or export markets, where prices for packaging grades are significantly weaker. Unfortunately, given that Verso owns no such converting assets for A3 Packaging Grades, it is fully exposed to “spot” and export pricing – the “bottom of the barrel”. This seems to put Verso in a precarious position in a competitive segment of a global commodity market, an adverse outcome that a knowledgeable Board with experience in the sectors in which the Company competes would have understood.

Accordingly, we expect the Company to disclose prior to the vote on the sale of the Specialty Mills (i) the detailed investment case upon which Board approval was granted to convert Androscoggin’s A3 paper machine to produce A3 Packaging Grades and (ii) a detailed comparison of the actual results to the original investment case. Such information is necessary for the Company’s stockholders to fully review the Board’s and management’s track record of capital spending before you pursue any additional non-maintenance investments in other mills.

To be clear, we are not supportive of the Company using proceeds from the sale of the Specialty Mills to invest in such projects at this time.

Operations of the Remaining Business to ensure fulfillment of its potential.

We believe that the Board has little or no expertise in the bleached kraft pulp and graphic paper markets, largely having been appointed by former lenders to the business (who seem to have largely sold out of their investments) following Verso’s bankruptcy and reorganization. Based on disclosures related to the sale, we understand the vast majority of Verso’s business remains in the bleached kraft pulp and graphic paper market segments (not packaging papers), so we were surprised that the Board recently added two additional members to the Board who have no experience in these market segments. While we applaud that you have actually added some people with manufacturing experience, it is unclear without meeting Ms. Taylor or Mr. Nebel whether they have relevant experience to shape the strategy for the Remaining Business or are simply appointees that the Co-Chairmen and other Board members believed would support their entrenchment efforts, and we would welcome the opportunity to meet with Ms. Taylor and Mr. Nebel (or other potential directors with specific sector expertise).

As you are aware, we know the Remaining Business quite well, given that we have made multiple offers to purchase a significant stake in Verso that would have (i) resulted in greater cash proceeds for stockholders than the net cash proceeds that will be generated as a result of the sale of the Specialty Mills ($282 million, which you have not committed to return to stockholders) and (ii) provided a total consideration at a meaningful premium to the $18.01 closing stock price as of December 2, 2018. Unfortunately, we were rebuffed by you, after you insisted that we pursue a full going-private transaction, which we did not believe was in the best interest of Verso’s stockholders, including Atlas and Blue Wolf. The reason we believed these offers would have been attractive to Verso’s stockholders is that they would have allowed stockholders to receive a large cash payment but also continue to participate in the significant cost reduction and commercial optimization opportunities that we identified and which the Company has never significantly addressed.

In furtherance of our long-term vision for the Company, we identified highly qualified director nominees with deep and extensive knowledge of the bleached kraft pulp and graphic paper and specialty paper segments of the industry and of companies undergoing operational challenges – areas where the Board has little or no expertise and which we believe are essential to maximizing value with or without the divestiture of the Specialty Mills. We had hoped that Verso would recognize our nominees as impressive, independent thinkers with directly relevant experience, something the Verso Board has been lacking. We fail to understand the Company’s rejection of our nominees, who specifically understand Verso, its specific markets and have a track record of fixing underperforming businesses. Given the results of the 2018 annual meeting, we would have expected the Board to be more engaged in exploring the recommendations from one of its largest stockholders, particularly in light of the fact that the level of “Withhold” votes for Co-Chairmen Eugene Davis and Alan Carr (which were higher than “Withhold” votes cast for any other members of the Board) at the 2018 annual meeting suggest to us a lack of stockholder confidence in the ability of the Co-Chairmen to chart a value-generating path forward.

While we recognize that the Company has appointed three new directors in an attempt to address the Board’s lack of industry expertise and, presumably, to comfort stockholders that share our view of the Board’s limitations, we have yet to hear a coherent strategy and execution plan for unlocking value in the Remaining Business or the Specialty Mills to the extent the transaction is not completed. We are concerned that these recent appointments are just an additional effort to entrench the management and current Board at the expense of stockholders. It is the responsibility of the Board to focus its attention on the best interests of the Company and its stockholders rather than entrenching itself.

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We are deeply concerned about the proposed sale transaction of the Specialty Mills because of the lack of transparency of vital information relating to the terms of the deal. We are also deeply concerned about your vision and strategy for the Remaining Business and remain prepared to engage in a dialogue that will lead to board representation that better aligns with stockholder interest (currently directors and management own less than 1% of the outstanding shares of the business).

We remain open and available to discuss our views regarding value creation opportunities for the Company and its stockholders when the Board is willing to do so. We hope that this can be a starting point for a more open and productive dialogue.

As we await your response to the concerns expressed herein, we will continue to monitor and take the actions necessary to protect our investment in Verso.

Sincerely,

ATLAS HOLDINGS LLC


By:		/s/ Timothy J. Fazio
Name:		Timothy J. Fazio
Title:		Managing Partner

BLUE WOLF CAPITAL ADVISORS IV, LLC


By:		/s/ Adam Blumenthal
Name:		Adam Blumenthal
Title:		Managing Member

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Lapetus Capital II LLC and certain affiliated entities intend to file a proxy statement with the U.S. Securities and Exchange Commission (the “SEC”) in connection with the solicitation of proxies from the stockholders of Verso Corporation for use at its 2019 annual meeting of stockholders. In accordance with Rule 14a-12(a)(1) under the Securities Exchange Act of 1934, as amended, the following persons are or may be deemed to be, participants in the proxy solicitation: Lapetus Capital II LLC, Atlas Capital Resources II LP, Atlas Capital GP II LP, Atlas Capital Resources GP II LLC, Lapetus Capital III LLC, Atlas Capital Resources III LP, Atlas Capital GP III LP, Atlas Capital Resources GP III LLC, Andrew M. Bursky, Timothy J. Fazio, Marvin Cooper, Sean Erwin, Jeffrey E. Kirt, and Timothy Lowe, BW Coated LLC, Blue Wolf Capital Fund IV, L.P., Blue Wolf Capital Advisors IV, L.P., Blue Wolf Capital Advisors IV, LLC and Adam Blumenthal. Certain of the participants may be deemed to beneficially own shares Class A Common Stock, par value $0.01 per share (“Common Stock”) of Verso Corporation as described in Lapetus Capital II LLC’s statement on Schedule 13D initially filed with the SEC September 20, 2019 (the “Lapetus Schedule 13D”) as it may be amended from time to time, and in BW Coated LLC’s statement on Schedule 13D initially filed with the SEC September 20, 2019 (the “BW Coated Schedule 13D”), as it may be amended from time to time. Additional information relating to the participants and their beneficial ownership of Common Stock is contained in the Lapetus Schedule 13D and the BW Coated Schedule 13D and will be set forth in the proxy statement and other materials filed with the SEC in connection with the solicitation of proxies by the participants.

INFORMATION RELATING TO THE PARTICIPANTS IN SUCH PROXY SOLICITATION IS CONTAINED IN THE LAPETUS SCHEDULE 13D AND THE BW COATED SCHEDULE 13D. EXCEPT AS OTHERWISE DISCLOSED IN THE LAPETUS SCHEDULE 13D OR THE BW COATED SCHEDULE 13D, AS APPLICABLE, THE PARTICIPANTS HAVE NO INTEREST IN VERSO CORPORATION OTHER THAN THROUGH THE BENEFICIAL OWNERSHIP OF SHARES OF COMMON STOCK OF VERSO CORPORATION, AS DISCLOSED IN THE LAPETUS SCHEDULE 13D OR THE BW COATED SCHEDULE 13D, AS APPLICABLE.

ALL STOCKHOLDERS OF VERSO CORPORATION ARE STRONGLY ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY THE PARTICIPANTS FROM THE STOCKHOLDERS OF VERSO CORPORATION WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN SUCH PROXY SOLICITATION. WHEN COMPLETED, A DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY WILL BE MAILED TO STOCKHOLDERS OF VERSO CORPORATION AND WILL ALSO BE AVAILABLE AT NO CHARGE AT THE SEC’S WEBSITE AT HTTP://WWW.SEC.GOV OR BY CONTACTING 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.

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About Atlas Holdings LLC

Headquartered in Greenwich, Connecticut and founded in 2002, Atlas and its affiliates own and operate 20 platform companies which employ more than 18,000 associates at more than 150 facilities worldwide. Atlas operates in sectors such as aluminum processing, automotive, building materials, capital equipment, construction services, food manufacturing and distribution, packaging, paper, power generation, pulp, supply chain management and wood products. Atlas’ companies together generate more than $5 billion dollars in revenues annually. For additional information, please visit www.atlasholdingsllc.com.

About Blue Wolf Capital Partners LLC

Blue Wolf Capital Partners LLC is a private equity firm that specializes in control investments in middle market companies. Leading by experience, and with a commitment to excellence, Blue Wolf collaborates with management to transform companies strategically and operationally. Blue Wolf manages challenging situations and complex relationships between businesses, customers, employees, unions, and regulators to create value for stakeholders. For additional information, please visit www.bluewolfcapital.com.

Cautionary Statement Regarding Forward-Looking Statements

The information herein contains “forward-looking statements.” Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “seeks,” “could,” “should” or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Our forward-looking statements are based on our current intent, belief, expectations, estimates and projections regarding the Company and projections regarding the industry in which it operates. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to differ materially. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

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