S&P: NewPage on negative watch

Standard & Poor's said it placed the ratings, including the B+ corporate credit rating, on NewPage Holdings Inc. on CreditWatch with negative implications.

The CreditWatch placement follows news that NewPage has agreed to be acquired by lower-rated competitor Verso Paper Holdings LLC for $1.4 billion.

Verso intends to acquire NewPage for $1.4 billion, composed of $250 million of cash, $650 million of new Verso first-lien notes and a refinancing of NewPage's $500 million term loan, S&P said.

Verso indicated that it has $750 million of committed financing to fund the cash consideration and the refinancing of the NewPage term loan, the agency said.

Both Verso and NewPage are large coated-paper manufacturers. Combined, the companies will have about $4.5 billion of sales. A substantial portion of these sales are to catalog and magazine end users, which S&Ps aid it believes are susceptible to substitution risks due to changing consumer preferences for electronic content.

The agency said it expects to resolve the CreditWatch placement when Verso completes the acquisition, which is expected in the second half of 2014.

S&P said it expects to lower the corporate credit rating on NewPage by one or two notches from the current B+ rating, said Tobias Crabtree, an S&P analyst.

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