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Verso Reaches Agreement on Reorg Plan, DIP Financing

January 28, 2016, 07:48 AM
Filed Under: Bankruptcy

Verso Corporation has finalized a restructuring support agreement (RSA) with creditors holding at least a majority in principal amount of substantially all tranches of funded debt of Verso and its subsidiaries in connection with Verso's filing for Chapter 11 protection in the United States Bankruptcy Court in the District of Delaware yesterday.  Verso also announced that it has finalized, subject to approval by the bankruptcy court, a debtor-in-possession (DIP) financing package totaling up to $600 million which will provide a clear path to a restructuring that will benefit Verso's stakeholders.

The RSA commits Verso and the signing creditors to pursue a consensual restructuring.  Verso and the signing creditors have agreed to support and vote for a plan of reorganization as contemplated by the RSA and as otherwise reasonably satisfactory.  Under the contemplated plan of reorganization, Verso will eliminate approximately $2.4 billion in pre-bankruptcy debt.  In return, the holders of Verso's funded debt will receive substantially all of the equity in the reorganized Verso.  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.

"As we announced yesterday, filing for Chapter 11 protection was a difficult decision for us.  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.  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," said Verso President and CEO David J. Paterson.

As noted yesterday, Verso is seeking immediate relief from the bankruptcy court through the filing of customary first day motions that will allow the company to transition its business into Chapter 11, including, among other things, granting the authority to pay pre-petition wages, salaries and benefits and to honor customer programs.

As a leading North American producer of printing and specialty papers and pulp, Verso provides insightful solutions that help drive improved customer efficiency, productivity, brand awareness and business results.

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