Nov. 6, 2009

Verso Paper sued over alternative fuel black liquor funding at Androscoggin mill in Maine

SAN FRANCISCO, Nov. 6, 2009 (RISI) - The former International Paper unit Thilmany, now owned by Packaging Dynamics Corp, sued Verso Paper last month seeking some of the black liquor alternative fuel funds received by Verso from the kraft pulping at the Androscoggin mill in Jay, Maine.

Thilmany has a supply agreement with Verso for the specialty paper output from Androscoggin paper machine No. 5.

Through the first nine months this year, Verso said it received $189 million from the US government in black liquor funds. The Androscoggin mill qualified for the black liquor funds with its kraft pulping capability.

Thilmany filed the lawsuit in Outagamie County, WI.

Thilmany runs two specialty paper PMs in Wisconsin.

"Thilmany alleges in the lawsuit that the alternative fuel mixture tax credits that (Verso) has received from the operation of the Androscoggin mill have the effect of reducing (Verso's) costs associated with operating the Androscoggin mill (including paper machine No. 5) and producing the pulp that (Verso) uses to manufacture paper products for Thilmany under the supply agreement between the parties," Verso said in its filing.

"Thilmany seeks unspecified damages for (Verso's) alleged breach of contract for failing to provide Thilmany with a prorated share of the purported cost savings attributable to the tax credits and a declaration that Thilmany is entitled to a prorated share of any such future costs savings attributable to (Verso's) use of alternative fuel mixtures at the Androscoggin mill," Verso said.

The former IP supercalendered and coated printing and writing papers unit was sold off and became Verso.