Lane Press Inc., publication printer specializing in magazines and catalogs

The 9th largest manufacturing sector in the U.S., the Forest Products Industry, of which the Paper Industry is a major part, plays a vital role in most regions of the U.S., where it ranks among the top 10 employers in 43 of 50 states.
The Paper Industry plays a very prominent role in both the US and world economies. This sector's global annual revenue today, from its over 300 million tons of products, exceeds 500 billion dollars, about one-third of which is attributable to the US Industry.
Lane Press’ close proximity to Northeast paper mills slashes transportation costs and reduces fuel surcharges.

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Two U.S. Paper Producers Pursue IPOs

NewPage Corporation and Verso Paper Co. are attempting to leverage the current state of the coated paper market with initial public offerings. Supply is tight, prices are high, and demand is holding for the time being—though forecasted to decline. For these two powerhouses in the coated paper market, this may be their window of opportunity.

In a recent article published by the Associated Press (“Verso Paper Takes Advantage of Rising Prices”), Matt Therian, an analyst at Renaissance Capital's IPOHome.com, is quoted as saying, "Coated paper is one of the most attractive areas of the paper industry right now," said "Demand in North America is outstripping supply and the remaining mills gain pricing power from that."

Current price forecasts may be promising to investors (Forest-products-data tracker RISI is forecasting average prices will rise 17% from 2007 to 2008 and 5% in 2009), but the flip-side is the continued escalation of costs. Skeptics are concerned that rising expenses for energy, raw materials, and freight may negate the effect of higher pricing. Furthermore, anticipated weak demand could foil producers’ attempts to successfully push through further price increases.

NewPage, the largest U.S. producer of coated paper, announced plans early last week (May 5) for an initial public offering. NewPage hasn’t disclosed the size or price range of its proposed IPO but indicated the offering price may total up to $805 million. The Miamisburg, Ohio-based company operates 25 paper machines at 12 mills located in Kentucky, Maine, Maryland, Michigan, Minnesota, Nova Scotia, and Wisconsin. NewPage’s 2007 sales, adjusted to include its recent acquisition of Store Enso North America Inc., totaled $4.7 billion. The company plans to list its shares on the New York Stock Exchange under the symbol "NWP."

Meanwhile, Memphis-based Verso began trading today on the New York Stock Exchange (under the symbol "VRS"). In its official registration dated May 9, Verso stated plans to sell 18.75 million shares at $16-$18 per share, which would have raised $300 million to $337.5 million. An amendment dated May 14 revised that plan to 14 million shares to be sold at $12 per share. Verso proceeded with that sale yesterday and raised $168 million, with an option for underwriters to sell an additional 2.1 million shares. A number of market factors may have contributed to the revised terms, including forecasted demand decline, high energy and raw material costs, and the generally weak economy.

Verso operates 11 paper machines at four mills, which have a combined annual production capacity of 1.7 million tons of coated paper. For the three months ended March 31, the company reported a loss of $3.1 million on sales of $453.9 million. This compares with a loss of $35.4 million on revenue of $359.8 million in the prior-year quarter. The company plans to use a majority of the proceeds to repay debt, including a loan that was used to pay dividends.