Verso Paper Makes Pitch to NewPage Note Holders Regarding Potential Business Combination
MEMPHIS, TN—July 2, 2012—Verso Paper announced it has held discussions with certain holders of NewPage Corp. senior secured notes in an effort to achieve a potential business combination involving Verso and NewPage as part of a consensual plan of reorganization in NewPage’s Chapter 11 bankruptcy proceedings.
The terms of Verso’s proposed transaction would provide NewPage’s first-lien note holders with $1.425 billion of value, consisting of $1.075 billion of new Verso first-lien notes, $150 million of Verso common stock, and $200 million of cash. In addition, the proposed transaction would include a 100-percent recovery in cash to repay NewPage’s debtor-in-possession financing, a 100-percent recovery in cash for the allowed priority and administrative claims in the bankruptcy proceedings, a to-be-determined amount of Verso common stock for the holders of NewPage’s second-lien notes, and a to-be-determined recovery for NewPage’s unsecured creditors.
To facilitate the transaction, a $200 million cash equity investment in Verso was contemplated. The proposed transaction would be subject to customary conditions, including the satisfactory completion of due diligence and the completion of antitrust review.
Verso believes that a combination with NewPage would create a stronger business in the global coated and supercalendered paper industry because of the material cost savings that would be achieved. Verso also believes that a combination with NewPage would provide a compelling option for a restructuring in that it would afford NewPage’s first-lien note holders a very attractive recovery, while at the same time treating fairly the other NewPage constituencies, including its employees, other creditor classes, and customers.
Despite these advantages, Verso has been disappointed with the lack of progress in advancing its discussions with the first-lien note holders. Verso continues to believe that its proposed transaction is the most sensible.
The terms of Verso’s proposal to NewPage’s first-lien note holders regarding the proposed transaction are included in the June 18, 2012 discussion materials attached as an exhibit to the current report on Form 8-K that Verso is filing with the Securities and Exchange Commission. Verso provided advance notice to NewPage of its presentation to the first-lien note holders and delivered its presentation to the first-lien note holders for discussion purposes only.
Verso also is including a withdrawn May 30, 2012 term sheet previously presented to the first-lien note holders as an exhibit to the current report on Form 8-K. This May 30 term sheet was superseded in its entirety by the term sheet included in the June 18, 2012 presentation, which was revised to reflect NewPage’s updated earnings and cash balance.
Based in Memphis, TN, Verso Paper Corp. is a leading North American producer of coated papers, including coated groundwood and coated freesheet, and specialty products. 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.