VRSZQ~On Monday, a bankruptcy judge is scheduled to look over a debt repayment plan from paper manufacturer Verso Corp. that offers little for some creditors.
Officials who put Verso into chapter 11 protection in January are proposing to secure between $600 million and $650 million in exit financing to pay for the company's emergence from bankruptcy.
Verso officials blamed the company's financial problems on the rise of digital media that has slashed demand for the magazines, catalogs and other publications that rely on Verso-made paper. They had reached a secured a deal with key creditors that would trade some $2.4 billion in debt for equity in the restructured company.
Court papers show that the holders of Verso first-lien debt, a group owed $1.18 billion, can expect to recover 30% of their claims via the 50% stake in the restructured company they would get under the restructuring plan. A 47% stake in the restructured company would go to lenders to NewPage, the former rival that Verso acquired last year. That includes the lenders that provided bankruptcy financing to NewPage, whose $184.48 million in claims are slated to be repaid in full, as well as NewPage's term loan lenders, whose recovery on $576.39 million in claims will come out to about 24 cents on the dollar.
But several groups of creditors would see recoveries of pennies on the dollar. The holders of Verso's senior bonds, owed $581.36 million, are set to get a 2.85% stake in the restructured company, which amounts to three cents on the dollar. Subordinated debt holders owed $112.84 million would get a 0.15% equity stake, for a recovery of 0.9%.
The company says its restructuring plan won't only slash its debt load but also will allow it to complete the integration of NewPage into Verso and will preserve the jobs of its employees, who numbered more than 5,000 as of the end of last year.
--Lillian Rizzo, Patrick Fitzgerald and Jacqueline Palank contributed to this article.
Write to Katy Stech at katy.stech@wsj.com
(END) Dow Jones Newswires
May 06, 2016 12:35 ET (16:35 GMT)
