Moody's downgrades Verso Paper

Moody's Investors Service said it downgraded Verso Paper Finance Holdings LLC's corporate family rating to B3 from B2 and downgraded the $89 million senior unsecured term loan due 2013 to Caa2 from Caa1.

Moody's also downgraded Verso Paper Holdings LLC's $150 million asset based revolving loan to Ba3 from Ba2, the $50 million revolving credit facility and the $345 million senior secured notes due 2019 rating to Ba3 from Ba2, the $272 million secured notes due 2019 to B3 from B2, the $396 million second-lien notes due 2019 to Caa1 from B3, the floating-rate second-lien notes due 2014 to Caa2 from Caa1 and the $143 million subordinated notes to Caa2 from Caa1.

The outlook is negative and the company's speculative grade liquidity rating remains SGL-3.

Moody's said the action reflects Verso's weaker than expected financial performance, continued secular decline in coated paper consumption and more challenging competitive landscape with the expected emergence from Chapter 11 of leading coated paper producer NewPage Corp. in a relatively stronger financial position.

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