Verso Paper Corp. says a weak response to a debt exchange offer could kill its proposed $1.4 billion acquisition of NewPage Holdings Inc., a deal that would affect three paper mills and about 2,250 workers in Maine.
The Portland Press Herald reported that Memphis-based Verso, in a letter to NewPage filed Tuesday with the U.S. Securities and Exchange Commission, cited "substantially less participation" in the exchange offer and said that was creating concern "about its ability to satisfy the exchange offer requirement and thus close the merger."
Under terms of the deal announced earlier this month, NewPage would receive $250 million in cash and $650 million in new debt to be issued at the closing, the newspaper reported. Verso would refinance $500 million of NewPage's debt and NewPage could get as much as 25% of Verso Paper's stock under certain circumstances.
A successful debt-exchange offer – which provides new notes with different terms and maturity dates for old notes – was a condition of the merger, the newspaper reported, noting that under the exchange offer the value of debt holders' claims would be cut by about 50%.
Verso's tender offer will remain open through Feb. 10.
If the merger does go through, the companies, which together have three mills in Maine, will have combined sales of around $4.5 billion, based on 2012 figures, and 11 manufacturing facilities in six states.
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