VOL. 131 | NO. 18 | Tuesday, January 26, 2016
Verso Files For Bankruptcy Reorganization
By Bill Dries
Verso Corp. filed Tuesday, Jan. 26, for Chapter 11 federal bankruptcy reorganization.
David J. Paterson, the president and CEO of the North American producer of printing, specialty papers and pulp, described the decision to file for reorganization as “difficult.”
But he added that the filing would not affect the Memphis-based company’s daily business.
“We are pleased that we enter this process with strong creditor support,” Paterson added in a written statement. “We have worked together with a broad spectrum of financial creditors to develop a restructuring plan to eliminate $2.4 billion of our outstanding debt and to exit the Chapter 11 process in a short timeframe.”
Paterson said close behind the bankruptcy filing in Delaware is finalizing a debtor-in-possession financing package of up to $600 million.
That package should be finalized Wednesday, according to the company.
With the financing, Verso will continue to operate on a day-to-day basis.
Verso completed its $1.4 billion acquisition of NewPage Holdings Inc. in January 2015. And Verso saw a $507 million net sales increase almost immediately.
As part of the acquisition’s financing, the company sold a paper mill in Maine for $60 million after closing it in October 2014.
But as 2015 went on, Verso saw a drop in demand for its products as foreign imports increased.
The combination put Verso in a bind. And by November Verso had an oversupply of products and was talking about selling more mills as well as seeking bankruptcy reorganization.
Verso sold a subsidiary that owns hydroelectric power plants earlier this month for $62 million.
“Verso’s impending financial obligations made it apparent that action was needed,” Paterson said. “Verso chose to take this proactive step with the firm belief that our company will emerge from the Chapter 11 process as a stronger company that is positioned to compete and win, even as challenges in the overall economic environment continue.”
As Verso was preparing to file for bankruptcy, shares in several global paper and packaging companies, including Memphis-based International Paper Co., took a tumble on Wall Street to start the week.
The tumble was a chain reaction that began with a cut in containerboard prices and as a result Citigroup downgraded IP shares to a neutral rating.