Item 8.01 Other Events.
Update Regarding Litigation Related to the Merger
As previously announced, on
Litigation Related to the Merger
Six complaints have been filed with respect to the Merger as of
The Stockholder Actions were filed by purported Company stockholders and assert claims against the Company and members of the board of directors (the "Board of Directors") of the Company.
The Stockholder Actions generally allege that the Company and the Board of
Directors violated Section 14(a) and Section 20(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), promulgated thereunder by omitting
material information from the Company's definitive proxy statement (the "Proxy
Statement") filed with the
On
--------------------------------------------------------------------------------
Although the Company cannot predict the outcome of or estimate the possible loss or range of loss from these matters, the Company believes that the allegations in the Stockholder Actions and the Demand Letter are meritless.
Supplemental Proxy Statement Disclosure
The Company does not believe, with respect to the complaints or demand letter in which the Company is named or addressed to, that supplemental disclosures are required or necessary under applicable laws. However, in order to minimize the expense of defending the Stockholder Actions and the Demand Letter, and without admitting any liability or wrongdoing, the Company is electing to make the supplemental disclosures to the Proxy Statement set forth below in response to the Stockholder Actions and the Demand Letter and solely for the purpose of mooting the allegations contained therein. The Company denies the allegations of the Stockholder Actions and the Demand Letter, and denies any violation of law. The Company believes that the Proxy Statement disclosed all material information required to be disclosed therein, and denies that the supplemental disclosures are material or are otherwise required to be disclosed. The Company is disclosing this information solely to eliminate the burden and expense of litigation. Nothing in the supplemental disclosures should be deemed an admission of the legal necessity or materiality of any supplemental disclosures under applicable laws.
--------------------------------------------------------------------------------
SUPPLEMENT TO PROXY STATEMENT
This supplemental information should be read in conjunction with the Proxy Statement, which should be read in its entirety. Page references in the below disclosures are to the pages in the Proxy Statement, and defined terms used but not defined herein have the meanings set forth in the Proxy Statement. Without admitting in any way that the disclosures below are material or otherwise required by law, the Company makes the following amended and supplemental disclosures. For clarity, new text within amended and restated paragraphs from the Proxy Statement is highlighted with bold, underlined text.
The section of the Proxy Statement entitled "Background of the Merger Agreement; Reasons for Recommendation" is amended and supplemented as follows:
The disclosure on page 27 of the Proxy Statement is modified by amending and restating the tenth paragraph in its entirety as follows:
On the same day, the Company and BillerudKorsnäs executed a confidentiality agreement with a customary standstill provision that would automatically terminate upon the earliest to occur of: (i) the entry by the Company into a definitive acquisition agreement with a third party, (ii) the entry by the Company into a binding business combination or similar agreement pursuant to which the Company's common stock would cease to represent 50% or more of the outstanding voting power or equity, or the Company's directors would cease to represent 50% or more of the total directors, of the surviving parent entity and (iii) the commencement of a tender or exchange offer by a third party for shares of common stock (that the Board of Directors fails to recommend against).
The disclosure on page 28 of the Proxy Statement is modified by amending and restating the first sentence appearing in the fourth paragraph in its entirety as follows:
On the same day, the Company and Atlas entered into a confidentiality agreement, which contained customary standstill provisions that would automatically terminate upon the earliest to occur of: (i) the entry by the Company into a definitive acquisition agreement with a third party, (ii) the commencement of a tender or exchange offer by a third party for shares of common stock (that the Board of Directors fails to recommend against), (iii) the entry by the Company into a definitive agreement to effectuate a transaction that requires the approval of the Company's stockholders and (iv) the Company or any of its subsidiaries filing for protection pursuant to bankruptcy or similar laws for the protections of debtors.
The disclosure on page 33 of the Proxy Statement is modified by adding the following paragraph following the second full paragraph:
At no point were individual post-transaction employment or directorships for the Company's directors or officers discussed between BillerudKorsnäs or Parent, on the one hand, and the Company's directors or officers, on the other hand.
The section of the Proxy Statement entitled "Financial Forecasts" is amended and supplemented as follows:
The disclosure on page 38 of the Proxy Statement is modified by amending and restating the first full paragraph in its entirety as follows:
The Financial Forecasts include certain non-GAAP measures (including adjusted
EBITDA, operating cash flow and total cash flow) because the Company believed
such measures would be useful to the Special Committee and the Board of
Directors in evaluating the prospects of the Company. Non-GAAP financial
measures should not be considered in isolation from, or as a substitute for,
financial information presented in accordance with generally accepted accounting
principles (''GAAP''), including net income from continuing operations. The
Company's calculations of these non-GAAP measures may differ from others in its
industry and are not necessarily comparable with information presented under
similar sounding captions used by other companies. Financial measures provided
to a company's financial advisors are excluded from the definition of non-GAAP
financial measures under applicable
--------------------------------------------------------------------------------
The section of the Proxy Statement entitled "Financial Forecasts" is amended and supplemented as follows:
The disclosure on page 39 of the Proxy Statement is modified by adding the
following table following the "FY 2021 to FY 2026" chart below the subheading
"Preliminary Financial Forecasts (
Second Half-Year 2021 to FY 2026 Unlevered Free Cash Flow
Six Months Ending
($ in millions) (unaudited)
2021E 2022E 2023E 2024E 2025E 2026E Unlevered Free Cash Flow(1) 86 144 (3) 59 84 83
(1) "Unlevered Free Cash Flow" is defined as net operating profit after taxes,
plus depreciation and amortization, less increases in net working capital, less
capital expenditures, less net pension income and cash contributions, less
restructuring activities and idled mill costs and strategic project costs, plus
net proceeds from asset sales, adjusted for certain other items. The
calculation of Unlevered Free Cash Flow was not expressly included in the
Preliminary Financial Forecasts but was derived from the Preliminary Financial
Forecasts and is included for reference.
The disclosure on page 39 of the Proxy Statement is modified by adding the
following table following the "FY 2021 to FY 2026" chart below the subheading
"Final Financial Forecasts (
Q4 2021 to FY 2026 Unlevered Free Cash Flow
Fiscal Quarter Ending ($ in millions) (unaudited) December 31, Fiscal Year Ending December 31, 2021E 2022E 2023E 2024E 2025E 2026E
Unlevered Free Cash Flow(1) 28 42 49 69 91 75
(1) "Unlevered Free Cash Flow" is defined as net operating profit after taxes, plus depreciation and amortization, less increases in net working capital, less capital expenditures, less net pension income and cash contributions, less restructuring activities and idled mill costs and strategic project costs, plus net proceeds from asset sales, adjusted for certain other items. The calculation of Unlevered Free Cash Flow was not expressly included in the Final Financial Forecasts but was derived from the Final Financial Forecasts and is included for reference.
The section of the Proxy Statement entitled "Opinion of
The disclosure on page 43 of the Proxy Statement below the subheading "Selected Public Company Analysis" is modified by amending and restating the first chart in its entirety as follows: EV/Adj. EBITDAP 2022E 2023E Verso - Consensus 3.2x n.a. Printing & Writing Companies Sappi Limited 5.1x 5.5x Resolute Forest Products Inc. 4.6x 7.2x Sylvamo Corporation 4.5x 5.2x Mean 4.7x 6.0x Median 4.6x 5.5x Pulp Producers Canfor Pulp Products Inc. 3.1x 3.5x Suzano S.A. 6.6x 7.2x Mercer International Inc. 4.7x 4.9x Mean 4.8x 5.2x Median 4.7x 4.9x Specialty Paper Companies Clearwater Paper Corporation 7.1x 5.7x Neenah, Inc. 8.4x 7.3x Mean 7.7x 6.5x Median 7.7x 6.5x
--------------------------------------------------------------------------------
The disclosure on page 44 of the Proxy Statement below the subheading "Selected Precedent Transaction Analysis" is modified by amending and restating the first chart in its entirety as follows:
TV/ LTM Adj. TV/ 5-Year High Date Announced Target Acquirer EBITDAP Adj. EBITDAP July 2021 Reno De Medici Affiliates of 6.9x 6.5x S.p.A. Apollo Global Management, Inc. May 2021 Domtar The Paper 10.1x(1) 4.8x Corporation Excellence Group February 2021 International Mayr-Melnhof 7.6x - Paper Company - Karton AG Kwidzyn Pulp Mill September 2020 Ahlstrom-Munksjö Affiliates of 9.3x 8.2x Oyj Bain Capital Private Equity November 2019 Verso Corporation Pixelle Specialty 8.2x - - Androscoggin & Solutions LLC Stevens Point Mills August 2018 P. H. Glatfelter Pixelle Specialty 10.3x 4.6x Company - Solutions LLC Specialty Paper Business May 2016 Weyerhauser International 6.3x 3.9x Company - Pulp Paper Company Business January 2014 NewPage Holdings Verso Corporation 6.4x 3.4x Inc. September 2013 Boise Inc. Packaging 7.0x 5.2x Corporation of America June 2012 Korsnäs AB Billerud AB 7.0x - Summary Adj. EBITDAP Precedent Transaction Statistics Low 6.3x 3.4x Median 7.3x 4.8x Mean 7.9x 5.2x High 10.3x 8.2x
(1) Domtar's LTM
2021E basis, the transaction multiple would be 5.7x EBITDAP.
The disclosure on page 45 of the Proxy Statement below the subheading "Discounted Cash Flow Analysis" is modified by amending and restating the first, second and third paragraphs in their entirety as follows.
Rothschild & Co performed a discounted cash flow ("DCF") analysis for Verso in
order to derive an implied per share equity value reference range for Verso if
it were to remain an independent public company, and then compared this implied
per share equity value reference range with the Merger Consideration provided
for in the Merger Agreement. In this analysis, Rothschild & Co calculated a
range of implied EVs by adding (i) the estimated unlevered, after-tax free cash
flows, including pension cash contributions, that Verso was forecasted to
generate for the three months ended
--------------------------------------------------------------------------------
Estimated unlevered, after-tax free cash flows for the terminal period were based on the December Forecasts provided by the management of Verso, and calculated as net operating profit after taxes, plus depreciation and amortization, less increases in net working capital, less capital expenditures, less pension income, less other accounting adjustments. Rothschild & Co used the mid-year discounting convention and applied a range of illustrative discount rates of twelve and one-quarter percent (12.25%) to fifteen and one-quarter percent (15.25%) based on an estimated WACC, which Rothschild & Co calculated using the traditional capital asset pricing model, which requires certain inputs including Verso's beta, betas for comparable companies, the estimated cost of debt for Verso, the estimated marginal tax rate for Verso and the estimated marginal tax rates of comparable companies, the capital structure weightings for Verso and the capital structure weightings of comparable companies, the risk-free rate and an equity risk premium, including a size risk premium.
Rothschild & Co calculated a range of implied equity values for Verso by adding
to the range of implied EVs the amount of Verso's net cash as of
The disclosure on page 47 of the Proxy Statement is modified by amending and restating the second full paragraph in its entirety by adding the following as the first sentence.
Except as described in the paragraph above, during the two-year period ending on
--------------------------------------------------------------------------------
Forward Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" regarding
Verso, BillerudKorsnäs or their respective management's future expectations,
beliefs, intentions, goals, strategies, plans and prospects, which, in the case
of Verso, are made in reliance on the "safe harbor" provisions within the
meaning of the
While forward-looking statements are Verso's and BillerudKorsnäs' current
predictions at the time they are made, you should not rely upon them.
Forward-looking statements represent Verso's and BillerudKorsnäs' management's
beliefs and assumptions only as of the date of this Current Report on Form 8-K,
unless otherwise indicated, and there is no implication that the information
contained in this Current Report on Form 8-K is made subsequent to such date.
For additional information concerning factors that could cause actual results
and outcomes to differ materially from those expressed or implied in the
forward-looking statements, please refer to the cautionary statements and risk
factors included in Verso's filings with the
Except as required by law, Verso and BillerudKorsnäs assume no obligation to update these forward-looking statements or this Current Report on Form 8-K, or to update, supplement or correct the information set forth in this Current Report on Form 8-K or the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. All subsequent written and oral forward-looking statements attributable to Verso or BillerudKorsnäs or any person acting on behalf of either party are expressly qualified in their entirety by the cautionary statements referenced above.
All subsequent written and oral forward-looking statements attributable to Verso, BillerudKorsnäs or any person acting on behalf of either party are expressly qualified in their entirety by the cautionary statements referenced above.
Additional Information and Where to Find It
In connection with the Merger, on
--------------------------------------------------------------------------------
Investors and security holders may obtain copies of these documents and any
other documents filed with or furnished to the
Participants in the Solicitation
Verso and its directors and certain of its executive officers and employees may
be deemed to be participants in the solicitation of proxies in respect of the
Merger under the rules of the
--------------------------------------------------------------------------------
© Edgar Online, source