Coated paper producer Verso has signed a definitive agreement to sell its two mills in the US to Pixelle Specialty Solutions.

The first mill is located in Androscoggin in Jay, Maine, and the other Stevens Point mill is in Wisconsin.

The company’s board of directors have approved the $400m deal. It is still subject to approval from the company’s stockholders, regulatory and other customary approvals.

Net cash proceeds will reach approximately $336m. Stockholders will receive a substantial amount from the proceeds in the form of dividend or share repurchase.

Verso will use approximately $54m of the net proceeds to decrease its unfunded pension liability and the remaining for general corporate purposes.

The transaction will close during the first quarter of 2020.

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Verso board co-chairman Gene Davis said: “We have undergone a thorough and comprehensive strategic process and firmly believe that the sale of these two mills at the agreed-upon terms and conditions is in the best interests of the company and our stockholders.

“We could not be more pleased by the efforts of the entire senior leadership team and of Les Lederer, our interim chief executive officer since April.”

In a separate development, Verso promoted current senior vice-president of Verso mills manufacturing Adam St John to CEO and a member of the board.

Verso manufactures speciality and graphic papers, packaging and pulp in the US.

The company’s products are used for label and converting, flexible packaging and technical paper applications.