Verso finalizes restructuring support agreement, DIP financing terms

By Caroline Salls

Pittsburgh, Jan. 27 – Verso Corp. finalized a restructuring support agreement with creditors holding at least a majority in principal amount of substantially all tranches of the funded debt of Verso and its subsidiaries, according to a company news release.

Verso said it also finalized a debtor-in-possession financing package that provides up to $600 million in new-money financing.

According to court documents, the Verso debtors obtained a commitment for a $100 million asset-based DIP revolving credit agreement, and the NewPage Corp. debtors obtained a commitment for up to $675 million in DIP financing, including $500 million in new-money financing.

Citibank, NA is the agent for the Verso DIP facility.

Interest will be alternative base rate plus 150 basis points for ABR loans and Libor plus 250 bps with a 0% floor for Eurocurrency rate loans.

The facility will mature on the earliest of 18 months from the closing date, the effective date of a Chapter 11 plan and the acceleration of the loans.

The NewPage DIP loan is comprised of a $325 million senior secured asset-based revolving credit facility and a $350 million senior secured term loan facility, consisting of $175 million in new money term loans and a dollar-for-dollar roll up of up to $175 million in loans held by the term lenders under a pre-bankruptcy facility.

Barclays Bank plc is the administrative agent.

Interest on the revolver will be the adjusted base rate plus 150 bps for ABR loans and Libor plus 250 bps for Eurocurrency rate loans, and interest on the term loan will be the adjusted Base rate plus 850 bps for ABR loans and Libor plus 950 bps for Eurocurrency rate loans.

The NewPage facility will mature on the earliest of 18 months after the closing date, 45 days after entry of the interim order if a final order has not been entered, the effective date of a Chapter 11 plan, completion of a sale of substantially all of the NewPage debtors’ assets and the acceleration of the loans.

All of the revolvers and up to $125 million of the term loan will be available to the Verso and NewPage debtors under interim orders filed with the court on Wednesday.

The final DIP financing hearing is scheduled for Feb. 24.

Restructuring support

The company said the RSA commits it and the signing creditors to move forward with a consensual restructuring.

As previously reported, under Verso’s proposed plan of reorganization, $2.4 billion in debt will be eliminated. In return, the holders of the company’s funded debt will receive substantially all of the equity in the reorganized Verso.

According to the release, the DIP financing package will provide Verso with significant operational flexibility to successfully reorganize and sufficient liquidity to support its ongoing operations for the foreseeable future during the Chapter 11 process.

“The strong creditor support we received in entering into the RSA and the fact that many of those same creditors participated as lenders in the DIP financing package are very gratifying,” president and chief executive officer David J. Paterson said in the release.

“With the support of this broad spectrum of financial creditors, we anticipate that we will be able to enter into a restructuring plan designed to eliminate approximately $2.4 billion of our outstanding debt and to exit the Chapter 11 process in a short timeframe.

“Upon completion of our plan, we will have a stronger balance sheet and operations that position us for long-term success.”

Verso, a Memphis-based producer of printing and specialty papers and pulp, filed bankruptcy on Jan. 26 in the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 case number is 16-10163.

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