S&P drops Verso Paper

Standard & Poor's said it lowered its corporate credit rating on Verso Paper Holdings LLC to B from B+.

At the same time, the agency said it assigned a B corporate credit rating to Verso's parent company Verso Paper Finance Holdings LLC and a CCC+ rating to Verso Finance's proposed $250 million senior unsecured loan due 2013, based on preliminary terms and conditions.

The outlook is stable on both companies.

Proceeds from the loan will be used to pay a dividend to Apollo Management, Verso's equity sponsor, the agency noted, adding that the rating on the new loan is two notches below the corporate credit rating and reflects the instrument's structural subordination.

According to S&P, the downgrade reflects Verso's weaker financial risk profile as a result of the new debt issue at Verso Finance, which increases total debt on a pro forma basis to $1.4 billion.

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