SOURCE: Chernela Communications

February 28, 2014 10:49 ET

Certain Holders of the Verso Paper 8.75% Second Lien Notes Have Received and Rejected a Proposal From Verso Paper

NEW YORK, NY--(Marketwired - Feb 28, 2014) -  Certain holders of the $396 million outstanding principal amount in Verso Paper 8.75% Second Lien Notes (respectively, the "Holders" and the "Second Lien Notes") have been in discussions with Verso Paper Corp. ("Verso Paper") on the terms of the exchange offer for the Second Lien Notes first announced by Verso Paper on January 6, 2014 (the "Exchange Offer").

The Holders received a proposal from Verso Paper on February 25, 2014 (the "Company Proposal") to revise the terms of the Exchange Offer. On February 14, 2014, and again on February 21, 2014, Verso extended the deadline to accept the Exchange Offer, and in each case the Company disclosed very limited participation at such times. The Exchange Offer was scheduled to expire on February 27, 2014, at 5:00 p.m., and the Holders were advised such deadline would not be extended.

The Holders were very disappointed in the terms of both the Exchange Offer and the Company Proposal. Accordingly, the Holders rejected the Company Proposal and (i) on February 26, 2014, reiterated their prior counterproposal submitted on February 24, 2014 and (ii) on February 27, 2014, submitted a further revised counterproposal (collectively, the "Counterproposal"). 

Terms of the Company Proposal were:

  • Minimum Participation: 75%
  • Maturity of new second lien notes: August 1, 2020
  • New second lien notes coupon: 10% cash interest, 3% PIK interest
  • Equity offered: 4% of Verso Paper common shares outstanding upon closing of the exchange offer
  • Exchange ratio and coupon are dependent on participation as follows:
Participation Exchange Ratio
75% 55.0
80% 56.5
85% 58.0
90% 59.5
95% 61.0
100% 62.5

Terms of the Counterproposal were:

  • Minimum Participation: 75%
  • Maturity of new second lien notes: February 1, 2019
  • New second lien notes coupon: 10% cash interest, 3% PIK interest
  • Exchange Ratio:
Participation Exchange Ratio
75% 55.0
80% 57.8
85% 60.3
90% 62.5
95% 64.5
100% 66.3
  • Equity: pro forma diluted equity of the combined Verso Paper/NewPage company of 25%, shared ratably by all participating Holders

The Counterproposal would reduce Verso Paper outstanding debt by approximately $133.7 million, which is the same amount of debt reduction provided for in the Company Proposal upon participation of 75% of the holders of the Second Lien Notes. The Holders believe that, because the equity component would be shared ratably by all holders of Second Lien Notes that consent to the Counterproposal, the Counterproposal would incentivize all holders to accept the Counterproposal and reduce the likelihood of outstanding Second Lien Notes not being exchanged. 

Negotiations between the Holders and Verso Paper have broken off, as evidenced by, among other things, the expiration of the Exchange Offer on Thursday, February 27, without it being accepted by the required number of holders of Second Lien Notes pursuant to its terms. The Holders remain willing to reengage Verso Paper in negotiations regarding the Exchange Offer on mutually beneficial terms. 

No agreements or understandings have been reached between the parties as of this time. The Holders reserve their rights to take all appropriate actions to protect their rights.

None of the Holders is a temporary insider or fiduciary of Verso Paper or any of its subsidiaries or affiliates or any creditor or equity owner of Verso Paper or any of its subsidiaries or affiliates, and each of the Holders expressly disclaims any purported fiduciary duty to any such parties.

All statements made in the Counterproposal and communications concerning it are in the nature of settlement discussions and compromise, are not intended to be and do not constitute representations of any fact or admissions of any liability, and are for the purpose of attempting to reach a consensual compromise and settlement. The Holders currently have no basis to believe that the Counterproposal will lead to any settlement or settlement discussions.

Nothing contained in the Counterproposal is intended or shall be construed to be an admission or a waiver of any rights, remedies, claims, or causes of action or defenses of any of the Holders. The information contained in the Counterproposal is for discussion purposes only and shall not constitute a commitment to vote for or consummate any transaction described therein.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The Counterproposal is not a solicitation for approval of any plan of reorganization or liquidation pursuant to title 11 of the United States Code or any other applicable law.

Contact Information

  • For Futher Information
    Rich Chernela
    Chernela Communications
    Email Contact