NewPage Inc. 5000 Ranking Seems Like a Cruel Joke

This is not a joke: NewPage, the shrinking paper-making giant that is teetering on the brink of bankruptcy court, was named yesterday to the Inc. 5000 list of the USA’s fastest-growing private companies.

This bit of odd news came out just as the country’s largest maker of magazine-quality paper was announcing the indefinite idling of its two-machine Port Hawkesbury mill in Nova Scotia.

The company earned the #3062 ranking on the magazine’s list by growing revenue from $2.17 billion in 2007 to $3.6 billion in 2010. What the magazine doesn’t mention is that the growth came solely from NewPage’s purchase of Stora Enso’s North American assets (including Port Hawkesbury) in late 2007.

NewPage’s sales dropped by 17% from 2008 to 2010 and are still declining because it has shut one-fourth of its production capacity. What was a 12-mill company in December 2007 is to become an eight-mill operation next month if the company follows through on its announced idling of Port Hawkesbury.

Making the Inc. 5000 list is typically a notable milestone for a growing American company, but the recognition seems like a cruel joke given what NewPage has already been through just this month, when it:

• Buried a reference to exploring “restructuring alternatives”, including a possible Chapter 11 bankrupt-protection filing, into a financial document, only to have some anonymous blogger spill the beans. (See NewPage Finally Says the B Word. ) The story has since been picked up by the the trade press as well as local news media covering the various NewPage mill towns. (Port Hawkesbury's mayor reportedly said last night that NewPage filed for Chapter 11 yesterday, but so far that claim cannot be verified.)


• Had to pay $600,000 in a settlement with former CFO David J. Prystash, whom the company said “has made certain allegations and threatened claims relating to or arising out of his employment and the termination of his employment with NewPage.”


• Ran into delays with asset sales that were supposed to generate much-needed cash.


• Had its credit downgraded once again.


• Announced the idling of Port Hawkesbury, which includes a world-class machine for making supercalendered paper. The move may be just an attempt to prevent an increase in the mill’s power rates, though every Canadian mill that sells primarily to the U.S. is on shaky ground these days because of currency rates. (For more about the mill's up-and-down fortunes, see Port Hawkesbury's Near-Death Experience.)