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5 年前
TEXT-S&P cuts Verso Paper Holdings LLC rating to 'SD'
2012年5月11日 / 晚上7点58分 / 5 年前

TEXT-S&P cuts Verso Paper Holdings LLC rating to 'SD'

Overview	
     -- U.S. coated paper manufacturer Verso Paper completed its recent 	
exchange offers for a portion of its senior subordinated notes due 2016 and 	
floating rate notes due 2014. We view the subordinated notes exchange offer as 	
a distressed exchange under our criteria.	
     -- We lowered our corporate credit rating on Verso Paper to 'SD' 	
(selective default) from 'CC', and lowered our rating on the subordinated 	
notes due 2016 to 'D' from 'CC'.	
     -- We also lowered our issue-level rating to 'CCC+' from 'B' and revised 	
the recovery rating to '6' from '3' on the company's 8.75% notes due 2019 and 	
remaining floating rate notes due 2014.	
	
	
Rating Action	
On May 11, 2012, Standard & Poor's Ratings Services lowered its corporate 	
credit ratings on Memphis, Tenn.-based coated-paper manufacturer Verso Paper 	
Holdings LLC (Verso Paper) and Verso Paper Finance Holdings LLC to 'SD' from 	
'CC'. 	
	
In addition, we lowered our issue-level rating on the company's 11.375% senior 	
subordinated notes due 2016 (subordinated notes) to 'D' from 'CC'. The company 	
issued $104.7 million of aggregate principal of 11.75% secured notes due 2019 	
in exchange for $157.5 million of the subordinated notes. 	
	
We also lowered our issue-level rating to 'CCC+' from 'B' and revised the 	
recovery rating to '6' from '3' on the company's $396 million 8.75% notes due 	
2019 and the remaining $13 million floating rate notes due 2014. The '6' 	
recovery rating indicates our expectation of negligible (0% to 10%) recovery 	
in the event of a payment default. Under our analysis, the 8.75% notes and 	
remaining floating rate notes have weaker recovery prospects as a result of 	
the debt exchange, since the liens securing the 8.75% notes will be 	
subordinated to the liens securing the exchange notes and the liens securing 	
the floating rate notes have been released. We subsequently will withdraw the 	
issue-level ratings on the floating rate notes due 2014. 	
	
Rationale	
The downgrade follows Verso Paper's announcement that it completed its 	
exchange offer to issue $104.7 million aggregate principal amount of exchange 	
notes in exchange for $157.5 million of subordinated notes. According to our 	
criteria, we view this as a "distressed exchange" and tantamount to default. 	
	
Each existing holder of subordinated notes received $665 principal amount (or 	
66.5% of par) of the exchange notes and a cash payment of $110 for each $1,000 	
principal amount of subordinated notes due 2016 they validly tendered on or 	
prior to 5:00 p.m. May 8, 2012. Verso Paper issued $104.7 million of exchange 	
notes in exchange for $157.5 million aggregate principal amount of the $300 	
million subordinated notes. The company also issued $166.9 million of exchange 	
notes on a dollar-for-dollar basis in exchange for its floating rate notes, 	
plus a cash payment of $30 million for each $1,000 principal amount of 	
floating rate notes tendered. The $271.6 million of exchange notes that Verso 	
issued--whether in exchange for subordinated notes or floating rate 	
notes--comprise a single class of securities under the same indenture. As 	
noted in our May 2, 2012, research update, the exchange notes have a 'BB-' 	
issue-level rating and a '1' recovery rating.  	
	
The exchange offers reduced Verso Paper's debt level by approximately $53 	
million and extended the maturity of a portion of its debt to 2019. The 	
company's 'CCC+' issue rating on its $396 million 8.75% notes due 2019 and 	
remaining floating rate notes due 2014 are based on our post-exchange 'B' 	
corporate credit rating. We have determined we would raise our corporate 	
credit ratings to 'B' from 'SD' within a few days following this report. The 	
post-exchange 'B' corporate credit rating on Verso Paper reflects Standard & 	
Poor's view of the combination of its "highly leveraged" financial risk and 	
"weak" business risk. Our ratings incorporate the company's limited product 	
diversity, substitution risks due to changing customer preferences for greater 	
electronic content, and vulnerability to fluctuations in input costs and 	
selling prices. In addition, despite our expectation that credit measures will 	
remain somewhat weak over the next year, we expect liquidity to remain 	
"adequate," attributable to its cash position, new credit facilities, and 	
manageable near-term debt maturity profile following the exchange offers.	
	
	
Related Criteria And Research	
     -- Methodology And Assumptions: Liquidity Descriptors For Global 	
Corporate Issuers, Sept. 28, 2011	
     -- Rating Implications Of Exchange Offers And Similar Restructurings, 	
Update, May 12, 2009	
     -- Key Credit Factors: Criteria For Rating The Forest Products Industry, 	
Dec. 11, 2009	
     -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008	
	
Ratings List	
Downgraded 	
                                        To                 From	
Verso Paper Holdings LLC	
 Corporate Credit Rating                SD/--              CC/Negative/--	
 Subordinated                           D                  CC	
  Recovery Rating                       6                  6	
 Senior Secured                         CCC+               B	
  Recovery Rating                       6                  3	
	
Verso Paper Finance Holdings LLC	
 Corporate Credit Rating                SD/--              CC/Negative/--	
	
Verso Paper Inc.	
 Senior Secured                         CCC+               B	
  Recovery Rating                       6                  3	
	
Withdrawn	
                                        To                 From	
Verso Paper Holdings LLC	
 Senior Secured                         NR                 B	
   Recovery Rating                      NR                 3	
 Senior Secured                         NR                 BB-	
   Recovery Rating                      NR                 1

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