Verso Paper debt remains weak, NewPage merger concerns grow; Alpha Natural bonds gaining steam

By Stephanie N. Rotondo

Phoenix, June 19 – Verso Paper Corp. remained notable in Thursday’s distressed debt arena, a trader said, as investors’ concerns regarding a proposed merger with NewPage Corp. continued to escalate.

The trader saw the 8¾% notes due 2019 falling 3 points to 41¾ on “pretty heavy volume, almost $20 million.”

The 11¾% notes due 2019 were “pretty active,” but unchanged around 80, he said.

As for the 11¾% notes due 2016, they were off over 4 points on the day, according to the trader.

He pegged the issue at 39½.

Rumor has it that a merger between Memphis-based Verso and Miamisburg, Ohio-based NewPage is struggling to get completed. The two papermakers announced the merger on Jan. 16. At that time, the deal was valued at about $1.4 billion.

Under the terms of the deal, NewPage stockholders would receive $250 million in cash, $650 million of new first-lien Verso notes and a 20% equity stake.

But just last month, Verso reported a first-quarter loss of $90 million, over double that seen in the first quarter of 2013.

On the positive side, Verso announced Tuesday that it was in early compliance with the New York Stock Exchange’s listing requirements, meaning that its equity was no longer in danger of being delisted.

Alpha’s rally continues

Alpha Natural Resources Inc.’s debt “continued higher,” a trader said.

He called the 6% notes due 2019 over a point better at 74 5/8.

He also deemed Alpha’s other bond issues up about a point.

A second market source saw the 6¼% notes due 2021 rising nearly a point to 72½ bid.

The Bristol, Va.-based coal producer presented at the Sterne Agee 2014 Boston Summit on Tuesday. In its presentation, the company said it was well-positioned to deal with a lingering soft market and that it was continuing to evaluate costs reductions.

The company also noted that demand growth is expected to be “more balanced” in 2014.

And, Alpha Natural affirmed its 2014 guidance on Tuesday.

Elsewhere in the coal space, Arch Coal Inc.’s bonds were also on the firm side.

A trader saw the 7¼% notes due 2021 rising half a point to 73½. The 7% notes due 2019 were up almost that amount at 75 1/8.

The 7¼% notes due 2020 gained nearly a point, closing at 74¼.

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