Verso reorganization plan confirmed; emergence likely by end of July

By Caroline Salls

Pittsburgh, June 23 – Verso Corp.’s plan of reorganization was confirmed by the U.S. Bankruptcy Court in the District of Delaware, according to a company news release.

Verso said the confirmation order clears the way for it to emerge from bankruptcy, likely by the end of July.

As previously reported, Verso’s restructuring will reduce its debt by $2.4 billion upon emergence.

The company said it expects to emerge from bankruptcy with $595 million in exit financing to support ongoing operations and capital investments. The exit financing will consist of an asset-based lending facility with borrowing capacity of up to $375 million led by Wells Fargo Bank, NA, and a $220 million term loan facility with available loan proceeds of $198 million led by Barclays Bank plc.

The confirmed plan requires no significant changes in the ordinary course of business to Verso’s wages and salaries, benefits, pension plans or collective bargaining agreements, the release said.

Creditor treatment

Treatment of creditors under the plan will include the following:

• Verso and NewPage ABL debtor-in-possession loans will be refinanced through an exit ABL loan;

• NewPage term DIP loan claims will be paid in full in cash. NewPage roll-up DIP term loan claims will be treated as class N3 claim. As class N3 creditors, they will receive a portion of the NewPage plan consideration equal to the allowed amount of the holder’s claim on the plan confirmation date;

• Administrative claims, priority tax claims and other-priority claims will be paid in full in cash;

• Other secured claims will be reinstated, holders will be paid in full in cash or receive the collateral securing the claims;

• Holders of Verso first-lien claims will receive a share of 50% of the equity consideration and 100% of new seven-year warrants to purchase 5% of the reorganized company’s equity with a strike price of $1.04 billion;

• Holders of Verso senior debt claims will receive a share of 2.85% of the equity consideration;

• Holders of Verso subordinated debt claims will receive a share of 0.15% of the equity consideration;

• Holders of general unsecured claims will receive a share of $3 million in cash;

• Verso intercompany claims will be either reinstated or canceled, extinguished and discharged, at the option of the debtors;

• Holders of the equity interests in Verso subsidiaries will be either reinstated, transferred to reorganized Verso or canceled, extinguished and discharged;

• Holders of equity interests in Verso Corp. will receive no distribution; and

• Holders of NewPage first-lien claims will receive a share of the NewPage plan consideration remaining after distribution to holders of the roll-up DIP term loan claims.

Looking ahead

“We anticipate that our unified, highly de-levered capital structure will allow us to make investments in Verso’s business that will help mitigate the continuing decline in the demand for coated paper products, to explore strategic opportunities that enable profitable growth, and to create value for all of our stakeholders,” president and chief executive officer David J. Paterson said in the release.

“We believe that Verso is poised for sustainable profitability, and we are excited about the opportunities ahead.”

PJT Partners LP provided restructuring and transactional services, and O’Melveny & Myers LLP provided restructuring legal advice and assistance to Verso throughout its restructuring.

Verso, a Memphis-based producer of printing and specialty papers and pulp, filed for bankruptcy on Jan. 26. The Chapter 11 case number is 16-10163.

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