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Verso Commences Debt Exchange Offers; Holders of 54% of Second Lien Notes Sign Support Agreement

July 3, 2014
MEMPHIS, TN—July 3, 2014—Verso Paper announced that two of its wholly owned subsidiaries, Verso Paper Holdings and Verso Paper (collectively, the "Issuers"), have launched offers to exchange (i) new Second Priority Adjustable Senior Secured Notes (the "New Second Lien Notes") and warrants ("Warrants") that will be mandatorily convertible into shares of common stock of Verso ("Common Stock") immediately prior to the completion of the Merger described below for any and all of the Issuers' outstanding 8.75 percent Second Priority Senior Secured Notes due 2019 (the "Old Second Lien Notes") and (ii) new Adjustable Senior Subordinated Notes (the "New Subordinated Notes") and Warrants for any and all of the Issuers' 11 3/8 percent Senior Subordinated Notes due 2016 (the "Old Subordinated Notes").

In connection with the exchange offers, the Issuers will solicit consents to amend the Old Second Lien Notes, the Old Subordinated Notes and the indentures governing the Old Second Lien Notes and the Old Subordinated Notes. The proposed amendments, which require the consent of a majority in outstanding aggregate principal amount of the Old Second Lien Notes and Old Subordinated Notes, respectively, will eliminate or waive substantially all of the restrictive covenants, eliminate certain events of default, modify covenants regarding mergers and transfer of assets, and modify or eliminate certain other provisions. In addition, the consents with respect to the Old Second Lien Notes will authorize a release of the liens and security interests in the collateral securing the Old Second Lien Notes. In order to be effected, the collateral release must be consented to by the holders of at least two-thirds in outstanding aggregate principal amount of the Old Second Lien Notes.

The exchange offers and consent solicitations will be conducted pursuant to the Agreement and Plan of Merger dated as of January 3, 2014 (the "Merger Agreement"), among Verso, Verso Merger Sub ("Merger Sub"), and NewPage Holdings ("NewPage"), pursuant to which Verso will acquire NewPage by means of the merger of Merger Sub with and into NewPage on the terms and subject to the conditions set forth in the Merger Agreement (the "Merger"), with NewPage surviving the Merger as an indirect, wholly owned subsidiary of Verso. The closing of the Merger is conditioned upon consummation of the exchange offers.

As of July 2, 2014, holders of approximately $213 million in aggregate principal amount of Old Second Lien Notes have agreed with the Issuers and Verso to tender all of their Old Second Lien Notes in the Second Lien Notes Exchange Offer.

"We thank the second lien noteholders who have already committed to the exchange offers for their support," said Verso President and CEO Dave Paterson. "Completing the exchange offers is an important step toward completing our acquisition of NewPage, which, pending antitrust clearance and the exchange offers closing, is still expected to close in the second half of 2014."

Second Lien Notes Exchange Offer
Prior to the consummation of the Merger, the New Second Lien Notes will have substantially the same terms as the Old Second Lien Notes in that the New Second Lien Notes will have their original principal amount ($396 million), will bear interest at a rate of 8.75 percent per annum, will mature on February 1, 2019 and will be governed by covenants that are substantially the same as the covenants currently governing the Old Second Lien Notes. If the Merger does not occur, the New Second Lien Notes will retain their original principal amount and these same terms.

Upon the consummation of the Merger, (i) the principal amount of the outstanding New Second Lien Notes will be adjusted such that a holder of $1,000 principal amount of New Second Lien Notes immediately prior to the Merger will hold $668.75 principal amount of New Second Lien Notes immediately following the Merger (assuming 100 percent participation in the Second Lien Notes Exchange Offer), (ii) the maturity date of the New Second Lien Notes will be extended to August 1, 2020, (iii) the interest rate will be adjusted such that the New Second Lien Notes will bear interest from and after the date of the consummation of the Merger at a rate of 10 percent per annum entirely in cash plus 3 percent per annum ("Second Lien Notes PIK Interest") payable entirely by increasing the principal amount of the outstanding New Second Lien Notes or by issuing additional New Second Lien Notes, (iv) the optional redemption provisions will be amended, (v) the New Second Lien Notes will thereafter be governed by different covenants, and (vi) the Warrants issued in the Second Lien Notes Exchange Offer will be mandatorily converted into shares of Common Stock.

Each Warrant will be convertible into one share of Common Stock. No fractional shares of Common Stock will be issued upon conversion of the Warrants. If, upon conversion of the Warrants, a holder would be entitled to receive a fractional interest in a share, we will round up to the nearest whole number the number of shares of Common Stock to be issued to the Warrant holder.

The New Second Lien Notes will be guaranteed by the wholly owned domestic restricted subsidiaries of Verso Paper Holdings that guarantee its credit facilities. After the Merger, the New Second Lien Notes also will be guaranteed by NewPage but not its subsidiaries.

The consummation of the Second Lien Notes Exchange Offer is conditioned upon, among other things, the valid tender, and not withdrawal, of at least 75 percent in aggregate principal amount of outstanding Old Second Lien Notes. The Issuers will make alternative arrangements on similar economic terms to the Second Lien Notes Exchange Offer for holders who are not Eligible Holders (as described below); the 75 percent minimum condition will include in it any Old Second Lien Notes held by such holders that tender pursuant to such alternative arrangements.

Eligible Holders who validly tender Old Second Lien Notes prior to 12:00 midnight, New York City time, at the end of July 16, 2014 (such date and time, as it may be extended by us, the "Second Lien Notes Early Tender Time") and do not validly withdraw their tender prior to 12:00 midnight, New York City time, at the end of July 16, 2014 will receive the Second Lien Notes Total Consideration for Old Second Lien Notes accepted in the Second Lien Notes Exchange Offer. "Second Lien Notes Total Consideration" means, for each $1,000 principal amount of Old Second Lien Notes tendered and accepted by us, $1,000 principal amount of New Second Lien Notes (which includes the Second Lien Notes Consent and early tender payment of $50 principal amount of New Second Lien Notes), without giving effect to the adjustment in principal amount upon the consummation of the Merger, and the Second Lien Notes Warrant Consideration. Eligible Holders who validly tender Old Second Lien Notes after the Second Lien Notes Early Tender Time, but prior to 12:00 midnight, New York City time, at the end of July 30, 2014 (such date and time, as it may be extended by us, the "Second Lien Notes Expiration Time"), will receive the Second Lien Notes Exchange Consideration for Old Second Lien Notes accepted in the Second Lien Notes Exchange Offer. "Second Lien Notes Exchange Consideration" means, for each $1,000 principal amount of Old Second Lien Notes tendered and accepted by us, $950 principal amount of New Second Lien Notes, without giving effect to the adjustment in principal amount upon the consummation of the Merger, and the Second Lien Notes Warrant Consideration. The Issuers will not pay accrued and unpaid interest on the Old Second Lien Notes exchanged for New Second Lien Notes on the settlement date for the Second Lien Notes Exchange Offer; interest on the New Second Lien Notes will accrue from August 1, 2014.

The Second Lien Notes Exchange Offer is not conditioned upon the consummation of the Subordinated Notes Exchange Offer.

Subordinated Notes Exchange Offer
Prior to the consummation of the Merger, the New Subordinated Notes will have substantially the same terms as the Old Subordinated Notes in that the New Subordinated Notes will have their original principal amount ($142.5 million), will bear interest at a rate of 113/8 percent per annum, will mature on August 1, 2016 and will be governed by covenants that are substantially the same as the covenants currently governing the Old Subordinated Notes. If the Merger does not occur, the New Subordinated Notes will retain their original principal amount and these same terms.

Upon the consummation of the Merger, (i) the principal amount of the outstanding New Subordinated Notes will be adjusted such that a holder of $1,000 principal amount of New Subordinated Notes immediately prior to the Merger will hold $681.875 principal amount of New Subordinated Notes immediately following the Merger (assuming 100 percent participation in the Subordinated Notes Exchange Offer), (ii) the maturity date of the New Subordinated Notes will be extended to August 1, 2021, (iii) the interest rate will be adjusted such that the New Subordinated Notes will bear interest from and after the date of the consummation of the Merger at a rate of 10 percent per annum entirely in cash plus 3 percent per annum ("Subordinated Notes PIK Interest") payable entirely by increasing the principal amount of the outstanding New Subordinated Notes or by issuing additional New Subordinated Notes, (iv) the optional redemption provisions will be amended, (v) the New Subordinated Notes will thereafter be governed by the different covenants, and (vi) the Warrants issued in the Subordinated Notes Exchange Offer will be mandatorily converted into shares of Common Stock.

Each Warrant will be convertible into one share of Common Stock. No fractional shares of Common Stock will be issued upon conversion of the Warrants. If, upon conversion of the Warrants, a holder would be entitled to receive a fractional interest in a share, we will round up to the nearest whole number the number of shares of Common Stock to be issued to the Warrant holder.

The New Subordinated Notes will be guaranteed by the wholly owned domestic restricted subsidiaries of Verso Paper Holdings that guarantee its credit facilities. After the Merger, the New Subordinated Notes also will be guaranteed by NewPage but not its subsidiaries.

The consummation of the Subordinated Notes Exchange Offer is conditioned upon, among other things, the valid tender, and not withdrawal, of at least 75 percent in aggregate principal amount of outstanding Old Subordinated Notes. The Issuers will make alternative arrangements on similar economic terms to the Subordinated Notes Exchange Offer for holders who are not Eligible Holders; the 75 percent minimum condition will include in it any Old Subordinated Notes held by such holders that tender pursuant to such alternative arrangements.

Eligible Holders who validly tender Old Subordinated Notes prior to 12:00 midnight, New York City time, at the end of July 16, 2014 (such date and time, as it may be extended by us, the "Subordinated Notes Early Tender Time") and do not validly withdraw their tender prior to 12:00 midnight, New York City time, at the end of July 16, 2014 will receive the Subordinated Notes Total Consideration for Old Subordinated Notes accepted in the Subordinated Notes Exchange Offer. "Subordinated Notes Total Consideration" means, for each $1,000 principal amount of Old Subordinated Notes tendered and accepted by us, $1,000 principal amount of New Subordinated Notes (which includes the Subordinated Notes Consent and early tender payment of $50 principal amount of New Subordinated Notes), without giving effect to the adjustment in principal amount upon the consummation of the Merger, and the Subordinated Notes Warrant Consideration. Eligible Holders who validly tender Old Subordinated Notes after the Subordinated Notes Early Tender Time, but prior to 12:00 midnight, New York City time, at the end of July 30, 2014 (such date and time, as it may be extended by us, the "Subordinated Notes Expiration Time") will receive the Subordinated Notes Exchange Consideration for Old Subordinated Notes accepted in the Subordinated Notes Exchange Offer. "Subordinated Notes Exchange Consideration" means, for each $1,000 principal amount of Old Subordinated Notes tendered and accepted by us, $950 principal amount of New Subordinated Notes, without giving effect to the adjustment in principal amount upon the consummation of the Merger, and the Subordinated Notes Warrant Consideration. The Issuers will not pay accrued and unpaid interest on the Old Subordinated Notes exchanged for New Subordinated Notes on the settlement date for the Subordinated Notes Exchange Offer; interest on the New Subordinated Notes will accrue from August 1, 2014.

The Subordinated Notes Exchange Offer is not conditioned upon the consummation of the Second Lien Notes Exchange Offer.

General
The Issuers may terminate or withdraw the Second Lien Notes Exchange Offer, the Second Lien Notes Consent Solicitation, the Subordinated Notes Exchange Offer and the Subordinated Notes Consent Solicitation at any time and for any reason, including if certain conditions described in the offering documents are not satisfied, subject to applicable law.

The issuance of the New Second Lien Notes, the New Subordinated Notes, the Warrants and the Common Stock issuable upon the mandatory conversion of the Warrants will not be registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws. The New Second Lien Notes, the New Subordinated Notes and the Warrants are being offered and issued only (1) in the United States to holders of Old Second Lien Notes or Old Subordinated Notes that are "qualified institutional buyers" as defined in Rule 144A under the Securities Act, and (2) outside the United States to holders of Old Second Lien Notes or Old Subordinated Notes that are not U.S. persons in reliance upon Regulation S under the Securities Act. Accordingly, the New Second Lien Notes, the New Subordinated Notes, the Warrants and the Common Stock issuable upon conversion of the Warrants will be subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act and other applicable securities laws, pursuant to registration or exemption therefrom. Hedging transactions involving the Warrants and shares of Common Stock issuable upon conversion of the Warrants may not be conducted unless in compliance with the Securities Act.

This announcement does not constitute an offer to purchase or a solicitation of an offer to sell any securities. The offering documents will be distributed only to holders of Old Second Lien Notes and Old Subordinated Notes that complete and return a letter of eligibility confirming that they are "Eligible Holders" for the purposes of the exchange offers and consent solicitations. Global Bondholder Services Corporation is acting as the Information Agent for the exchange offers. Requests for the offering documents from "Eligible Holders" may be directed to Global Bondholder Services Corporation at (212) 430-3774 (for brokers and banks) or (866) 470-3700 (for all others). Holders that are U.S. persons and not qualified institutional buyers or non-U.S. persons that are not non-U.S. qualified offerees will not be able to receive such documents, but the Issuers will make alternative arrangements available to ensure that they can participate on a comparable basis. Such holders should contact Global Bondholder Services Corporation and, after furnishing proof of their status as non-qualified institutional buyers or non-U.S. persons that are not non-U.S. qualified offerees, will receive information about arrangements available to them.

Neither the boards of directors of the Issuers nor any other person makes any recommendation as to whether the holders of Old Second Lien Notes or Old Subordinated Notes should exchange their notes, and no one has been authorized to make such a recommendation. Holders of Old Second Lien Notes or Old Subordinated Notes must make their own decisions as to whether to exchange their notes, and if they decide to do so, the principal amount of the notes to exchange.

About Verso Paper
Verso Paper is a leading North American producer of coated papers, including coated groundwood and coated freesheet, and specialty products. Verso is headquartered in Memphis, Tennessee, and owns three paper mills in Maine and Michigan. Verso's paper products are used primarily in media and marketing applications, including magazines, catalogs and commercial printing applications such as high-end advertising brochures, annual reports and direct-mail advertising.

Source: Verso Paper.
 

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