The Verso paper company board of directors has warned shareholders that a bid by dissident investors to seize control of the board could jeopardize the upcoming sale of the Androscoggin Mill in Jay.

A pair of private equity firms backing a slate of candidates in an upcoming board election also own a competitor, Twin River Paper in Madawaska, the Verso board said in a Monday letter to shareholders. The mill in Jay and the mill in Madawaska each employ about 500 people.

If the private equity firms win the election next month, it will likely pave the way for a merger of Verso and Twin Rivers and derail the $400 million sale of Verso mills in Jay and Stevens Point, Wisconsin, to specialty paper company Pixelle Specialty Solutions, the board warned.

Atlas Holdings, of Connecticut, and Blue Wolf Capital Partners, of New York, and their affiliated companies collectively own about 9 percent of Verso, making them one of the largest owners of the Ohio-based paper company. The companies have been trying to take control of Verso through different means for more than two years, the board said.

“Among other potential mischief, we believe that if their nominees are elected, Atlas/Blue Wolf will attempt to … derail the Pixelle transaction in an effort to enhance Twin Rivers’ competitive position in coated specialty papers and potentially jeopardize the benefits of the sale transaction to the Company and its other stockholders,” said the board statement. “We believe Atlas/Blue Wolf has every intention to continue its distressed attempts to take effective control of Verso and its attractive assets so as to combine with Twin Rivers and camouflage the failing performance of Atlas/Blue Wolf’s industry assets.”

Verso will hold a vote on Jan. 31 to select a new board of directors and authorize the Pixelle sale. The board urged shareholders to support its seven nominees.

A representative for Atlas and Blue Wolf declined to answer questions about the letter Monday, but referred to federal filings the companies made this month in which they said the Verso board had mismanaged the company and questioned the transparency of the Pixelle sale. The firms nominated three new board members, including a former Twin Rivers CEO, to refocus the company, the two firms said in a Dec. 5 filing.

“We believe that the company has industry-leading assets and a high-quality workforce that, if managed properly, should produce substantial returns for its shareholders,” said Andrew Bursky, Atlas managing partner, and Timothy Fazio, Blue Wolf managing partner, in the filing.

“But, we also believe that, over the period of our investment, the board and management have failed to drive value for stockholders primarily because, in our opinion, the board lacks the required industry experience and skills to do that.”

It cites as an example the board’s poor timing to pursue a $17 million upgrade at the Jay mill to make packaging paper, the companies said. Other U.S. mills had announced or already completed similar conversions, creating a market oversupply that would depress prices, putting Verso in a “precarious position.”

Although a combination of Verso and Twin Rivers was discussed for about four months in 2018, the two investment firms this summer said they are not proposing another sale and if they did, it would have to be approved by independent directors and disinterested stockholders.

In its latest letter, the Verso board said that without upgrading the Jay mill, it would likely have been closed, at a cost of $55 million. The Jay mill has produced paper under various owners since the late 1800s.

In the last four years, the company has outperformed peers and it plans to return $225 million from the Pixelle sale to shareholders.

The three board members nominated by Atlas and Blue Wolf are conflicted and would work for Atlas and Blue Wolf, not other shareholders, the board said in its Monday letter.

“We believe the submission of these conflicted Atlas/Blue Wolf nominees underscores that Atlas/Blue Wolf has no plans for Verso other than to implement a self-serving agenda that seeks to obstruct the future prospects of Verso to the benefit of Atlas/Blue Wolf alone,” they said.