S&P lowers its issue-level rating on Verso Paper's senior unsecured term loan to CC from CCC

NEW YORK , January 24, 2013 (press release) – Standard & Poor's Ratings Services today lowered its issue-level rating on Verso Paper Finance Holdings LLC's (HoldCo) senior unsecured term loan to 'CC' from 'CCC'. All other ratings, including Verso Paper Holdings LLC's (Verso Paper) corporate credit rating, are unchanged. Today's rating action follows Verso Paper's announcement that it intends to enter privately negotiated transactions with certain lenders that hold the HoldCo's senior unsecured term loan. Pursuant to this transaction, Verso Paper and Verso Paper Corp. would issue new first lien notes to the HoldCo lenders in exchange for the assignment to Verso Paper of their HoldCo loans and the cancellation of such HoldCo loans. Verso Paper also announced that it can provide no assurance that any such transactions will be consummated.

As of Sept. 30, 2012, about $89 million was outstanding on the HoldCo term loan. The HoldCo loan matures Feb. 1, 2013, and Verso Paper's first lien notes mature Jan. 15, 2019. According to our criteria, we would view this as a distressed exchange and tantamount to a default. The offer, in our view, implies the investor could receive less value than the promise of the original securities and the new securities' maturities extend beyond the original maturity date. (See "Rating Implications Of Exchange Offers And Similar Restructurings, Update," published May 12, 2009.) We previously lowered our ratings on Verso Paper Holdings LLC and Verso Paper Finance Holdings LLC to 'SD' and subsequently raised them following a series of debt exchanges completed in 2012 that we viewed as tantamount to default. (See the research update on Verso Paper Holdings LLC published May 14, 2012.)

Ratings List

Ratings Unchanged

Verso Paper Holdings LLC
Verso Paper Finance Holdings LLC
Corporate Credit Rating B-/Stable/--

Ratings Lowered/Recovery Rating Unchanged

To From
Verso Paper Finance Holdings LLC
Senior Unsecured CC CCC
Recovery Rating 6 6

Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. 

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