Apollo-Backed Verso Gets Debt Exchange Needed for Merger

Verso Paper Corp. (VRS), the struggling paper maker controlled by Apollo Global Management LLC, convinced enough bondholders to accept a debt exchange needed for its merger with NewPage Holdings Inc.

About 75.6 percent of holders of Verso’s $396 million of 8.75 percent second-lien notes due in 2019 and 71.6 percent of owners of the $142.5 million of 11.375 percent subordinated bonds due in 2016, agreed to swap their securities, exceeding the minimum thresholds, the Memphis, Tennessee-based company said today in a statement.

Verso has been trying to persuade the creditors to accept an exchange that will reduce its debt, satisfying a prerequisite for its $1.4 billion deal to buy NewPage. Verso pulled an initial offer made in January after negotiations with debtholders failed and then sweetened the terms of the deal.

“We have made significant progress to completing our acquisition of NewPage,” Dave Paterson, chief executive officer, said in the statement.

The 8.75 percent second-lien notes, of which $96.6 million remains outstanding, traded at 58 cents on the dollar July 29 to yield 24.7 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. That’s up from as low as 40.3 cents June 24.

The 11.375 percent bonds, which now total $40.5 million, traded at 72 cents July 25 to yield 31.2 percent, rising from a low this year of 39.5 cents on June 19, Trace data show. The exchange offer for these securities expires Aug. 6 and the deadline for the second-lien swap was yesterday.

The company’s shares rose 1.6 percent to $3.17 at 10:11 a.m. in New York. The stock traded as low as 65 cents in January.

To contact the reporter on this story: Christine Idzelis in New York at cidzelis@bloomberg.net

To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net Richard Bravo, Faris Khan

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