Verso seeks $600 million as part of Chapter 11 bankruptcy filing

KNOXVILLE (Scrap Monster): Memphis, Tennessee-based Verso Corporation has announced voluntary filing of Chapter 11 bankruptcy petition with the US Bankruptcy Court in the District of Delaware. The company has sought $600 million in new financing as part of the filing.

The company noted that the filing would help to strengthen its balance sheet position. It also assured that the filing process will virtually have no impact whatsoever on day-to-day operations of all its seven mills. The process is being entered with strong creditor support, noted David J. Paterson, President and CEO, Verso. The restructuring plan will help eliminate $2.4 billion of its debts on books. The financing package of nearly $600 million will be finalized soon. The package will help the company to reorganize its operations. Further, it will provide sufficient liquidity to support its operations in foreseen future.

The company has cited several reasons that prompted the need for filing. First and foremost among them is the unprecedented decline in product demand during the previous year. In addition, rising strength in US dollar relative to other world currencies led to significant jump in paper products imports by the US. The impending financial obligations also made it necessary for the company to go ahead with the filing process.

Verso had agreed to buy NewPage in a deal valued at $1.4 billion. However, the US Department of Justice had imposed several anti-monopoly conditions, fearing a monopoly in coated paper market. Though the acquisition was supposed to boost Verso’s product portfolio, the long delay in official merger of two entities has offset the advantage.

Verso Corporation is a leading North American producer of printing papers, specialty papers and pulp.