Verso Corp. Files Voluntary Petitions under Chapter 11 of the U.S. Bankruptcy Code
Verso expects the reorganization process to have virtually no impact on its daily business.
Jan. 26, 2016 - Verso Corporation (VRSZ) today announced that the company and its subsidiaries have filed voluntary petitions with the United States Bankruptcy Court in the District of Delaware to reorganize under Chapter 11 of the U.S. Bankruptcy Code.
Verso's board of directors authorized the filing of the Chapter 11 cases to facilitate a debt restructuring necessary to strengthen the company's balance sheet and to position Verso for long-term success.
Verso expects today's announcement will have virtually no impact on the day-to-day operations of the company.
"While filing for Chapter 11 protection was a difficult decision, we are pleased that we enter this process with strong creditor support. We have worked together with a broad spectrum of financial creditors to develop a restructuring plan to eliminate $2.4 billion of our outstanding debt and to exit the Chapter 11 process in a short timeframe," said Verso President and CEO David J. Paterson.
The expected agreement on terms for a plan of reorganization is with creditors holding at least a majority in principal amount of most classes of funded debt of Verso and its subsidiaries. Verso anticipates that upon finalizing agreed-upon terms, the plan of reorganization would result in the holders of its funded debt receiving equity of Verso in exchange for their claims.
Verso also expects to finalize a debtor-in-possession (DIP) financing package totaling up to $600 million in the next day that will provide the company with significant operational flexibility to successfully reorganize. The DIP package will provide Verso with sufficient liquidity to support its ongoing operations for the foreseeable future during the Chapter 11 process.
Verso will promptly seek 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.
Paterson explained the filing, noting that "since Verso acquired NewPage Holdings Inc. in January 2015, a confluence of external factors, including an accelerated and unprecedented decline in demand for our products, a significant increase in foreign imports resulting from a strong U.S. dollar relative to foreign currencies, and Verso's impending financial obligations made it apparent that action was needed."
He further noted that "Verso chose to take this proactive step with the firm belief that our company will emerge from the Chapter 11 process as a stronger company that is positioned to compete and win, even as challenges in the overall economic environment continue."
Verso expects the reorganization process to have virtually no impact on its daily business. "Verso intends to operate our business as usual with an unwavering focus on running our facilities safely and efficiently, delivering the high quality products and services our customers have come to expect from us, maintaining valued relationships with our suppliers, protecting the environment, and being a good neighbor in the communities where we operate," Paterson said.
A link titled "Verso Restructuring" has been added to the home page of Verso's website, versoco.com, to provide information about the bankruptcy process and legal filings made with the Bankruptcy Court.
The company's Consolidated Water Power Company subsidiary is not part of the bankruptcy filing.
Verso is the leading North American producer of printing and specialty papers and pulp. For more information, please visit versoco.com
SOURCE: Verso Corporation