Verso Paper Corp. (VRS:US), a U.S. maker of coated paper used in magazines, jumped the most in almost four months after saying it proposed a merger with NewPage Corp., a rival that filed for bankruptcy in September.
The shares rose 48 percent to $1.73 at the close in New York, the biggest gain since March 8.
Verso has held discussions with some holders of closely held NewPage’s 11.375 percent first-lien senior secured notes, Memphis, Tennessee-based Verso said today in a statement. Under the terms of Verso’s proposed deal, the holders of the notes would get $1.08 billion of new Verso notes, $150 million of new Verso stock and $200 million in cash.
NewPage doesn’t support the bid, which poses “significant downside risks” for its “stakeholders,” workers and business, the Miamisburg, Ohio-based company said today in a separate statement. NewPage said it doesn’t anticipate further discussions about the proposal.
Verso and NewPage have struggled financially amid declining demand for magazine paper while tablet computers such as Apple Inc.’s iPad become increasingly popular. Verso has posted net losses for nine consecutive quarters, according to data (VRS:US) compiled by Bloomberg.
“A combination with NewPage would create a stronger business in the global coated and supercalendered paper industry because of the material cost savings that would be achieved,” Verso said in its statement.
Supercalendered paper is used for magazines, catalogs and directories.
Verso’s bonds jumped to the highest level since they were sold in May. The company’s $271.6 million of 11.75 percent bonds due in January 2019 rose 5.5 cents to 81.5 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
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