S&P rates Verso notes B

Standard & Poor's said it assigned a B rating to Verso Paper Holdings LLC's (B/stable) proposed $360 million second-priority senior secured notes due 2019. The recovery rating is 3, indicating expectation for 50% to 70% recovery.

Proceeds will be used to pay for the company's cash tender offer for its $337 million 9 1/8% second-priority senior secured fixed rate notes due 2014 and to redeem any remaining second-lien notes following the end of the offer.

The B corporate credit rating reflects the company's highly leveraged financial risk profile and weak business risk profile, the agency said.

Ratings incorporate the company's limited product diversity, substitution risks and vulnerability to fluctuations in input costs and selling prices, the agency noted.

In addition, the company is expected to maintain adequate liquidity despite adjusted leverage likely exceeding 6x throughout 2011, which is attributed to its relatively good cash position and lack of meaningful debt maturities until 2013, S&P said.

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