NewPage Announces Restructuring Update
NewPage Corporation announced that it has been engaged in a series of discussions with its various constituents, including first lien note holders, second lien note holders and the Unsecured Creditors’ Committee, in an effort to finalize a consensual Chapter 11 plan.
During these discussions, an ad hoc group of second lien note holders presented to an ad hoc group of first lien note holders an unsolicited proposal to combine NewPage and Verso Paper Corp. After thoroughly evaluating this proposal, NewPage determined that the combination posed significant downside risks to its stakeholders, employees, and business. NewPage has also been advised that the first lien note holder group did not support the proposal. Accordingly, NewPage does not anticipate further discussions regarding this proposal.
Previously, Verso Paper Corp. announced that it has held discussions with certain holders of the 11.375% first lien senior secured notes of NewPage 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 noteholders 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% recovery in cash to repay NewPage’s debtor-in-possession financing, a 100% 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.
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 noteholders a very attractive recovery, while at the same time treating fairly the other NewPage constituencies.
NewPage is a producer of printing and specialty papers in North America with $3.5 billion in net sales for the year ended December 31, 2011.
Previously on abfjournal.com: