Verso Paper To Acquire NewPage Holdings In $1.4 Bln Deal - Quick Facts

(RTTNews) - Verso Paper Corp. (VRS), a leading North American producer of coated papers, said Monday that it agreed to acquire NewPage Holdings Inc., a producer of printing and specialty papers, in a transaction valued at $1.4 billion.

Upon closing of the transaction, the combined company will have sales of about $4.5 billion and 11 manufacturing facilities located in six states.

The deal has been unanimously approved by the boards of directors of both companies. The transaction is expected to close in the second half of 2014, subject to regulatory approvals.

The combination of the two companies is expected to result in at least $175 million of pre-tax total cost synergies, which are expected to be achieved during the first 18 months after completion of the transaction.

As per the terms of the transaction, NewPage's equity holders will receive total cash and debt consideration of $900 million, consisting of $250 million in cash, most of which will be paid to the stockholders as a special dividend prior to closing and the remainder of which will be paid at closing, and $650 million of new Verso first lien notes to be issued at closing.

NewPage's equity holders also will receive shares of Verso common stock representing 20% (subject to potential adjustment up to 25% under certain circumstances) of the outstanding shares as of immediately prior to closing. Certain of NewPage's stockholders owning a majority of the outstanding shares of NewPage common stock have agreed to vote their shares in favor of the approval of the transaction.

Verso noted that it will finance the acquisition through $750 million in committed financing, which will be used to pay the cash portion of the merger consideration and to refinance NewPage's existing $500 million term loan prior to closing. The value of the transaction is $1.4 billion, composed of the cash consideration, the $650 million of new Verso first lien notes, the Verso common stock and the refinancing of NewPage's $500 million term loan.

In addition, Verso noted that it plans to conduct exchange offers and consent solicitations for its outstanding fixed-rate second lien notes and subordinated notes. The closing of the acquisition is conditioned upon the consummation of the exchange offers. The transaction also is subject to regulatory approvals and other closing conditions.

Verso said that its CEO, Dave Paterson, will lead the combined organization. At closing, Verso has agreed to appoint to its board of directors a current director of NewPage.

Verso noted that the two companies will work together to ensure a smooth transition for their stakeholders, and their focus will be to retain the best talent from Verso and NewPage for the combined company.