When a corporate CEO leaves after only four months on the job and the chairman quits on the same day, you can bet that something is afoot. But what exactly is going on at NewPage is still a mystery two days after the big paper maker announced a shakeup at the top.
NewPage announced the resignations Tuesday of CEO E. Thomas Curley, Chairman Mark Suwyn, and HR chief Michael Edicola and the hiring of Robert Nardelli as non-executive chairman. Nardelli, who headed The Home Depot when its stock tanked and then led Chrysler into bankruptcy reorganization, is #17 on Portfolio.com’s list of the “worst American CEOs of all time.”
The announcement and a subsequent conference call with stock analysts provided little insight into the departure of Curley, who came to NewPage on Feb. 10 after heading Rolls-Royce Energy. The price of NewPage’s bonds dropped more than 2% on Tuesday, resulting in a yield of 14% and indicating Wall Street's queasiness with the shakeup.
Nardelli made this cryptic statement, according to the Dayton Daily News: “The board of directors basically saw a unique moment in time for NewPage and the paper industry. The board felt we needed to move expeditiously and expedite the pace of change to make sure NewPage comes out of the recessionary period stronger, more formidable with sustainable, reliable and predictable performance."
NewPage announced a CEO search, which indicates that Curley’s departure was unexpected and that a replacement wasn't waiting in the wings.
It’s no secret that the heavily leveraged NewPage has struggled amidst the recession and overcapacity in North American coated paper. Last month, it withdrew its two-year-old application for an initial public stock offering.
But NewPage was in trouble before Curley came on board. It restructured its debt last year in a way that Standard & Poor's called “tantamount to a default,” and three vulture funds had been buying its bonds in an apparent bet that they could take over when the company collapsed. The IPO cancellation seems to have been a bow to the inevitable.
With coated markets tightening, prices finally rising, two competitors shutting machines (apparently with NewPage’s help), some patching up of relations with current and former customers, and the anti-dumping case against Asian producers progressing, things seem to have gone about as well as could be expected during Curley’s brief tenure.
One clue to Tuesday’s announcement is that Nardelli is a “Cerberus guy,” while NewPage was Curley’s first gig with the big hedge fund. Like NewPage, Chrysler was controlled by Cerberus, and Nardelli is CEO of Cerberus Operating & Advisory Co.
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