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Technical Side
Law firm says it’s investigating Verso, NewPage debt exchange

NEW YORK -- The law firm of Wohl & Fruchter LLP announced Thursday that it is investigating the debt exchange offer recently announced by Verso Paper Corp.

On January 6, 2014, Verso announced that it had entered into a merger agreement with NewPage Holdings Inc., a producer of printing and specialty papers, under which Verso will acquire NewPage (the Merger).

The same day, Verso also announced that two of its wholly owned subsidiaries, Verso Paper Holdings LLC and Verso Paper Inc., would commence offers to exchange new Second Priority Adjustable Senior Secured Notes (the “New Second Lien Notes”) and new Adjustable Senior Subordinated Notes (the “New Subordinated Notes”) for any and all of their outstanding 8.75% Second Priority Senior Secured Notes due 2019 (the “Old Second Lien Notes”) and Senior Subordinated Notes due 2016 (the “Old Subordinated Notes”), respectively.

Under the debt exchange offer, upon the consummation of the Merger, (1) the principal amount of the Old Second Lien Notes will be adjusted such that a holder of $1,000 principal amount of such Notes before the Merger will hold only $470 principal amount of New Second Lien Notes after the Merger, and (2) the principal amount of the Old Subordinated Notes will be adjusted such that a holder of $1,000 principal amount of such Notes before the Merger will hold only $570 principal amount of New Subordinated Notes after the Merger.

The proposed debt exchange will thus entail a significant write-off of principal debt held by Old Second Lien Noteholders and Old Subordinated Noteholders without any compensation. Specifically, $396 million of face value in Old Second Lien Notes will turn into $186.1 million in New Second Lien Notes, and $142.5 million in Old Subordinated Notes will turn into $81.2 million in New Subordinated Notes, which represents debt forgiveness of approximately $271.1 million.

Wohl & Fruchter’s investigation reportedly concerns the fairness of the debt exchange offer from the standpoint of Old Second Lien Noteholders and Old Subordinated Noteholders.


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