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S&P cuts Verso Paper, notes, loans
Standard & Poor's said it lowered its corporate credit ratings on Verso Paper Holdings LLC and Verso Paper Finance Holdings LLC to D from CCC-.
At the same time, the agency took the following actions:
• Lowered the issue-level ratings on Verso Holdings’ 11¾% senior secured notes issued in 2012 and 2015 (2012 first-lien notes and 2015 first-lien notes, respectively) to D from CCC-. The 4 recovery rating on the notes is unchanged;
• Lowered the issue-level rating on Verso Holdings’ remaining 11¾% senior notes (1½-lien notes) to D from C. The 6 recovery rating on the notes is unchanged;
• Lowered the issue-level rating on NewPage Corp.'s senior secured term loan to D from CCC-. The 3 recovery rating on the term loan is unchanged;
• Lowered the issue-level ratings on Verso Paper Holdings’ $150 million asset-backed loan revolving credit facility (ABL) due 2017 to CC from CCC+. The 1 recovery reflects an expectation for very high recovery (90% to 100%). It is the agency’s understanding that Verso is current on the ABL, but it views a default to be a virtual certainty given the company's disclosure that it is exploring alternatives to restructure its balance sheet; and
• Lowered the issue-level ratings on Verso Paper Holdings’ $50 million revolving cash flow facility due 2017 to CC from CCC-. The 4 recovery rating on the facility reflects an expectation for average recovery (30% to 50%; lower half of the range). S&P expects a default to be a virtual certainty given the company's stated intentions to restructure its balance sheet.
The C issue-level rating and 6 recovery rating on the company's second priority and senior subordinated notes are unchanged at this time.
S&P said the downgrades follow the company’s announcement that it elected to exercise the grace periods with respect to interest payments due on several debt obligations.
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