S&P: Verso Paper notes BB-

Standard & Poor's said it assigned a BB- rating and 1 recovery rating to Verso Paper Holdings LLC's proposed $345 million senior secured notes due 2019.

The 1 recovery rating indicates 90% to 100% expected recovery in a default.

The notes are expected to be sold pursuant to Rule 144A.

The proceeds will be used to pay the consideration for its announced cash tender offer for its existing $315 million 11½% senior secured notes due 2014 and to pay for certain related transaction costs and expenses.

The B corporate credit rating on the company remains unchanged and reflects its highly leveraged financial risk and weak business risk, S&P said.

The ratings incorporate the company's limited product diversity, substitution risks due to changing customer preferences for greater electronic content and vulnerability to fluctuations in input costs and selling prices, the agency said.

Despite an expectation that credit measures will remain somewhat weak over the next year, the agency said it expects liquidity to remain adequate, attributable to its cash position, proposed new credit facilities and manageable near-term debt maturity profile following the proposed transaction and tender offer.

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