Verso Paper Corp.'s shares soared Tuesday after the paper company said it's talking with stakeholders of NewPage Corp. about bidding for the rival company, which filed for Chapter 11 bankruptcy protection in September.
THE SPARK: Verso said late Monday that it has been talking with holders of NewPage's first-lien senior secured notes about buying NewPage for roughly $1.43 billion.
Verso said it's offering those note holders $1.08 billion of new Verso notes, $150 million of new Verso stock and $200 million in cash. Verso also said it would repay NewPage's debtor-in-possession financing and give NewPage's second-lien note holders an as-yet-undetermined amount of Verso stock. Other NewPage creditors also would stand to benefit.
NewPage said Tuesday morning that it does not support the deal and that it would pose significant risks to its stakeholders, employees and business. The company said it has been advised that the first-lien note holder group did not support the proposal. NewPage said it doesn't anticipate further discussions about the bid.
THE BIG PICTURE: Verso and NewPage both make coated paper for magazines, catalogs and marketing material. Both companies have struggled recently with falling demand and rising costs.
Verso said the deal would create a stronger business by combining forces and reducing costs, but it said it's been disappointed with the slow pace of its talks with NewPage's first-lien note holders.
SHARE ACTION: Verso's shares rose 56 cents, or nearly 48 percent, to close Tuesday at $1.73. Shares of the Memphis, Tenn.-based company have traded between 85 cents and $3.36 in the past 52 weeks.
Privately held NewPage Corp. is based in Miamisburg, Ohio.