www.paperage.com JANUARY/FEBRUARY 2014 DRYER SECTION PERFORMANCE Five easily applied dryer performance indicators make way for optimal energy efficiency CONTAINERBOARD Capacity bulge, sluggish demand remain challenges for containerboard market In Tune for Sustainability, Agility and Profitability HIGHLIGHTS • Tissue360° Forum • State of the Industry • OpEx Reliability Workshop • Papermaking Sessions • Executive Panel • Coating Sessions • Expanded Exhibit Hours Keynote Speakers: Jim Abbott Dan Malenke Former Major League President, Baseball Pitcher PKGPRO papercon.org Reliability OpEx Workshop Joining PaperCon: at PaperCon 2014 FORUM contents JANUARY/FEBRUARY 2014, Volume 130, Number 1 COLUMNS 14 Market Grade: Containerboard 2013 wasn’t a bad year for containerboard mills but results were decidedly mixed. Price increases were enacted on board and corrugated boxes in early 2013 that boosted margins, but underlying box demand was stagnant. 2014 offers hope that improved economic growth can propel box demand to stronger gains, but the impact of new containerboard capacity remains a nagging concern. 18 16 Heads-Up: Quiet Start in Europe The European paper industry is off to a relatively quiet start in 2014, and industry observers say the year may continue as such, which may be a FEATURES good thing. 18 Easy-to-Apply Dryer Performance 30 Recycling Matters Indicators Continuous commitment to paper recovery for The dryer section is a large consumer of energy, recycling paper recovery has fostered a dynamic but ensuring it is operating efficiently is not marketplace that allows recovered fiber to find difficult. By assessing only a few easily applied its highest-value use, which helps to encourage “dryer performance indicators”, one can deter- even more recycling. mine whether large improvement opportunity exists. DEPARTMENTS 22 Microbiological Auditing and 4 Editor’s Note Control – A New and Powerful 6 Industry News Approach to Controlling Problem Organisms 12 People A genetic-based technique used to detect and 13 Calendar identify troublesome microbes in paper mills’ fresh water systems has been found to be quick, accurate, and less cumbersome than traditional SERVICES methods. 29 Classified Ads 26 Keep it Running Smooth To succeed in today’s fiercely competitive market- 29 Index of Advertisers place, pulp and paper manufacturers positively, absolutely, require maximum equipment availability and productivity from their machinery, and a disciplined lubrication management program can make this happen. PaperAge JANUARY/FEBRUARY 2014 3 editors note JANUARY/FEBRUARY 2014 If at first you don’t VOLUME 130, NO. 1 succeed… EDITOR IN CHIEF Jack O’Brien By John O’Brien, Managing Editor PUBLISHER Michael C. O’Brien [email protected] MANAGING EDITOR John F. O’Brien, Jr. CONTRIBUTING EDITOR Harold M. Cody . try, try again. With that in mind, Verso improved if Verso was able to acquire CONTRIBUTING WRITER David Price Paper on January 6 announced that it would NewPage’s assets at fire sale prices or if debtors CONTRIBUTING WRITER John Yolton acquire NewPage in a deal valued at $1.4 fail to reorganize; (2) Verso is significantly LAYOUT & DESIGN George H. Dean Co. billion. This will be a very big deal if the two threatened by the possibility that NewPage companies can actually get past the initial will successfully reorganize under a stand- proposal stage. They’ve been down this road alone plan and emerge from bankruptcy a SALES OFFICE 20 Schofield Road before and it has been a very, very bumpy stronger, healthier company with a deleveraged Cohasset, MA 02025-1922 ride to say the least. balance sheet; and (3) Verso stands to benefit Phone: (781) 923-1016 Fax: (781) 923-1389 As some may recall, the on-again, off-again from any delays in the debtors emergence email: [email protected] romance between Verso and NewPage dates from bankruptcy and can be expected to Web Site: www.paperage.com back to 2010 and early-2011. At that time, oppose all stand-alone plan proposals and any EDITORIAL OFFICE private equity owners, Apollo Management near-term restructuring. 42A Country Way (Verso) and Cerberus (NewPage), were repor- Over the summer of 2012, the two com- Scituate, MA 02066-3743 Phone: (781) 378-2126 tedly in talks that most industry observers pre- panies sparred until Verso on Sept. 4 finally Fax: (781) 923-1389 sumed were about the combination of North called a halt to its pursuit of NewPage, stating email: [email protected] America’s two largest coated paper producers. that “it has decided to cease further discussions Web Site: www.paperage.com However, many analysts pointed out that the with NewPage Corporation or its creditors Copyright ©2014 by O’Brien Publications, Inc. All rights reserved. PaperAge (ISSN:0031-1081) is published six two papermakers carried much too much debt regarding a potential business combination.” times per year with those issues being January/February, March/April, May/June, July/August, September/October, for the deal to make financial sense, especially Or maybe not. After a 16-month regroup- November/December by O’Brien Publications, Inc., to certain groups of lienholders. ing period, both parties, it seems, have had a 20 Schofield Road, Cohasset, MA 02025-1922. Periodicals postage paid at Cohasset, MA and additional Nothing, it appeared, but speculation change of heart and are in agreement to the mailing offices. resulted from those talks, and on September structure of a new deal (see page 6) — a very Publication Mail Agreement #40112731. 7, 2011, NewPage filed for creditor protection complicated deal. In a recent presentation by Canadian Mail distribution information: under Chapter 11. Verso, “NewPage Operating Company would Express Messenger International, P.O. Box 25058, London BRC. As NewPage moved into its tenth month be a non-guarantor restricted subsidiary for Ontario, Canada N6C 6A8 of reorganization, Verso on July 2, 2012 Verso’s notes with a standalone capital POSTMASTER: Please send change of addresses to: announced that it had “held discussions with structure.” PaperAge, 20 Schofield Road, Cohasset, MA 02025-1922. certain holders of the 11.375% first-lien senior Moody’s Investor Services explains it secured notes of NewPage Corporation in an like this, “It is anticipated that following the Subscriptions: PaperAge is mailed without charge in the U.S. and Canada (upon written request) to qualified effort to achieve a potential business combina- acquisition, Verso and NewPage will be run as individuals in the pulp, paper, paperboard, and paper tion involving Verso and NewPage as part of a separate legal entities with a shared services converting industries. To all others there is a subscription charge of $54.00 in the U.S., $60.00 in Canada, and consensual plan of reorganization in NewPage’s agreement.” $90.00 in all other countries. Single copies may be Chapter 11 bankruptcy proceedings.” Regardless of the complexities, Verso has purchased for $10.00 each. All payments must be made How did that proposal go over? Not very hung in there, I’ll grant it that. And although in U.S. funds and checks must be drawn from a U.S. bank. Credit cards are accepted. well; not very well at all. Just ten days after the there remains a lot of people to satisfy, includ- Reproduction of by any means of the whole or part of proposal, an attorney representing holders ing possibly antitrust regulators (Verso and PaperAge, without written permission, is prohibited. of first-lien debt strongly rebuffed the deal in NewPage would have at least 50% of the a letter to Judge Kevin Gross, U.S. Bankruptcy coated freesheet market), perseverance may Court in Delaware. The letter concluded that be the lynchpin that sees the deal through (1) Verso’s market position would be greatly this time around. n 4 JANUARY/FEBRUARY 2014 PaperAge Thiele_Pencil_PaperAge_fp_1 10/21/10 5:03 PM Page 1 If you had to choose a kaolin supplier based on one quality, which would you choose? o TAILORED SOLUTIONS o SERVICE o STABILITY o LONGEVITY o GLOBAL REACH o PRODUCT DEVELOPMENT The good news is you can have them all with Thiele, a privately held company serving papermakers worldwide since January 1, 1947. Thiele Kaolin Company • Sandersville, GA (877) 544-3322 • thielekaolin.com Tailoring kaolin to your needs. industry news NORTH AMERICA Verso Paper to Acquire NewPage in $1.4 Billion Deal Verso Paper and NewPage on expected to be achieved during the first 18 months after comple- Jan. 6 announced a definitive tion of the transaction. agreement under which Verso Dave Paterson will lead the combined organization. will acquire NewPage in a trans- Under the terms of the deal, NewPage’s equity holders will action valued at $1.4 billion. receive total cash and debt consideration of $900 million, con- Upon closing of the deal, the combined company will have sisting of $250 million in cash, most of which will be paid to sales of approximately $4.5 billion and 11 manufacturing facili- the stockholders as a special dividend prior to closing and the ties located in six states. remainder of which will be paid at closing, and $650 million of The transaction, which has been unanimously approved by new Verso first lien notes to be issued at closing. the boards of directors of both companies, is expected to close in NewPage’s equity holders also will receive shares of Verso the second half of 2014, subject to regulatory approvals. common stock representing 20% (subject to potential adjust- “The combination of Verso and NewPage will create a stron- ment up to 25% under certain circumstances) of the outstanding ger business that is better positioned to serve our customers shares as of immediately prior to closing. Certain of NewPage’s and compete in a competitive global marketplace,” said David J. stockholders owning a majority of the outstanding shares of Paterson, Verso’s President and CEO.