Verso Paper Corp. failed to garner enough interest from bondholders by an early deadline for a debt-swap plan that may help the company acquire a rival and avoid bankruptcy.
Less than 75 percent of the securities, which include Verso’s $396 million of 8.75 percent second-lien bonds due February 2019 and $142.5 million of 11.375 percent subordinated notes due August 2016, were offered in the exchange, according to a statement today.
Verso, owned by Leon Black’s Apollo Global Management LLC, needs bondholders to agree to a debt-reducing exchange in order to close a $1.4 billion deal to buy NewPage Holdings Inc. The company has had trouble persuading creditors to take a smaller stake in the equity of the new company than the 25 percent share they proposed in February.
“We are disappointed that we have not yet reached the 75 percent minimum condition for the exchange offers,” Dave Paterson, Verso’s chief executive officer, said today in the statement.
The second-lien notes fell 2.4 cents on the dollar to 47.6 cents at 11:12 a.m. in New York to yield 31 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Robert Mundy, the chief financial officer of the Memphis, Tennessee-based company, didn’t return a telephone message seeking comment.
Holders of the subordinated notes tendered 12.4 percent of the securities by yesterday at midnight, which was the early deadline for the exchange, according to the statement. Creditors exchanged 72.4 percent of the second-lien securities by that time. Bondholders have until July 30 to exchange their debt.
Verso is seeking to exchange the notes for new debt and warrants that will convert into equity, according to a July 2 statement. Verso first introduced an offer to swap the notes on Jan. 6, the same day it announced its plan to merge with NewPage.