S&P assigns BB- issue-level rating to Verso Paper's new US$150M asset-based revolving loan facility and US$50M revolving credit facility
Kendall Sinclair
NEW YORK
,
March 16, 2012
(press release)
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Standard & Poor's Ratings Services said today it assigned its 'BB-' issue-level rating (two notches higher than the corporate credit rating) to Verso Paper Holdings LLC's new $150 million asset-based revolving loan facility (ABL) and $50 million revolving credit facility. We assigned a '1' recovery rating to the facilities, indicating our expectation for very high (90% to 100%) recovery of principal in the event of payment default.
The new credit facilities will replace the company's existing $200 million revolving credit facility which matures on August 1, 2012.
(For the complete recovery analysis, see the recovery report on Verso Paper, to be published as soon following this release.)
The 'B' corporate credit rating on Verso Paper reflects our view of the company's "highly leveraged" financial risk and "weak" business risk (as our criteria define the terms). 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 company's plans to use proceeds from the issuance of $345 million of notes due 2019 to extend $315 million of its 2014 maturities.
(For the complete corporate credit rating analysis, see the summary analysis on Verso Paper Holdings LLC, published Nov. 21, 2011, on RatingsDirect.)
Verso's core business is as a producer of coated freesheet and coated groundwood papers serving customers in the catalog, magazine, inserts, and commercial-print markets.
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