A filing with the U.S. Securities and Exchange Commission opens up the possibility that the Verso paper mill in Jay may be sold, as the investor holding a majority of the shares is frustrated with the returns.

The Androscoggin Mill, owned by Verso Corp., has faced difficulty in recent months. Earlier this summer, the mill shut down its No. 3 paper machine permanently, resulting in the layoff of about 120 workers, though many of those workers had either found new employment or entered into training programs before the machine was switched off.

The filing was made by eight separate entities, though all are associated with Mudrick Capital, a New York City-based investment firm that owns 15.3 percent of the company’s shares. The firm is managed by Jason Mudrick, who is listed as a general partner of all eight entities in the joint filing made Tuesday. According to its website, Mudrick Capital Management, L.P., is an investment firm that specializes in long- and short-term investments in distressed credit. It was founded in 2009 with $5 million under management. As of September, it had grown to manage about $1.6 billion.

“The Reporting Persons are deeply frustrated with the Board’s inaction to address the Issuer’s rapidly deteriorating financial position,” the filing reads. “The Reporting Persons have expressed these frustrations to the Board and intend to continue its dialogue with the Board to help enact a strategic plan that will return value to stockholders, including a potential sale of the Stevens Point and Androscoggin mills. If the Board does not engage with the Reporting Persons in good faith, the Reporting Persons intend to pursue all other avenues to protect its investment.”

Jesse Marzouk, a paper analyst for Hilco Valuation Services, said he didn’t have information on any sale discussions involving the mill, but he said it wouldn’t be surprising, given what’s happened to paper mills in Maine over the past decade. He said the Androscoggin mill is smaller than it used to be in terms of workforce, and lines have been shut down.

“Would someone be interested in buying the mill and changing it to a different type of paper? Maybe,” he said.

He said if the company received a decent offer, he could see the mill getting sold. But he said mills are in a difficult place, trying to transition out of producing coated paper, and there is not a great track record of buyers coming in to buy a mill that produces that paper.

Jay Town Manager Shiloh LaFreniere said rumors of a potential sale have been circulating for the past few months and she knew about the SEC filing.

“I would say it’s probably what we’ve been hearing all along,” she said. “It’s not any new news we’ve been hearing.”

Mill manager Everett O’Neill said he was aware of the SEC filing but did not have any information beyond that. He said he didn’t have details on the potential sale.

Kathi Rowzie, vice president of communications and public affairs at Verso, was not available.

In a conference call earlier this summer, CEO Chris DiSantis said, “Androscoggin Mill is being evaluated for additional capital investment for expanded product line offerings and to enhance cogeneration capabilities.”

In that call, Verso managers said they hired a consultant to look at each of the company’s seven mills and the company as a whole to determine how to wring the best value out of them for shareholders. That consultant, global investment bank Houlihan Lokey, is the top mergers and acquisitions adviser in the country, according to Thomson Reuters. The Androscoggin Mill was singled out as an example of how converting to a new product line and reducing excess capacity positions the company to increase revenue.

The No. 5 machine is now at 78 percent capacity and growing, according to the second-quarter report. Once it achieves full capacity, it could contribute $10 million in revenue.

In an earlier filing with the SEC, the company said severance and benefits payouts related to the shutdown of the No. 3 machine would amount to about $4 million, plus another $1 million in writing off spare parts and inventory produced on the No. 3 paper machine in 2016.

The shutdown of the No. 3 machine reduces the mill’s annual coated paper production capacity by about 200,000 tons.

Despite the changes, O’Neill said, the mill is running smoothly.

“Things are really coming along very nicely with its existing configuration,” O’Neill said. “We’ve got the mill in a good spot, I think.”

He also said employee morale was “pretty darn good” and he was pleased with the workforce.

Verso is not alone in its struggles. Closures and layoffs have plagued the state’s paper industry in recent years. Five mills have closed in the last few years, including Verso’s Bucksport mill in 2014, with more than 500 jobs lost. The Madison Paper mill closed in May 2016, which put more than 200 people out of work. More than 2,300 workers in Maine have lost their jobs since 2011.

The Androscoggin Mill laid off 300 employees in 2015 as part of a plan to reduce production capacity. Verso then emerged from bankruptcy in the summer of 2016 with about 560 employees. In November 2016, the company said it expected to lay off around 190 workers.

The most recent layoffs left the Androscoggin Mill with about 400 employees. Of the 120 employees who were laid off, about 20 were rehired for new positions at the mill. The mill’s employees are not unionized.

The mill’s decline has taken a significant financial toll on the town, leading to town and school budget cuts. In 2016, the town raised its property tax rate from $17.25 to $21.10 to try to make up some of its lost revenue from the mill’s declining value.

Rosaire Pelletier, the liaison to the forest products industry for Gov. Paul LePage, said he had not heard of a potential sale of the Androscoggin Mill, but he said it was a good mill and a good asset, one that he hoped a buyer would find attractive. He said Verso has a lot of moving parts, but he had not heard that the company was interested in selling the mill.

Colin Ellis — 861-9253

cellis@centralmaine.com

Twitter: @colinoellis