S&P lowers Verso Paper

Standard & Poor's said it lowered Verso Paper Holdings LLC's corporate credit rating to B- from B and removed ratings from CreditWatch, where they were placed with negative implications on March 12.

The agency assigned B+ issue and 1 recovery ratings to the proposed $325 million senior secured notes due 2014 to be issued by Verso Escrow LLC, a wholly owned subsidiary.

The outlook is negative.

Proceeds will be used to repay the term loan outstanding under the company's senior secured credit facilities.

"The downgrade reflects our expectation that the steep decline in demand for coated paper in the U.S. and its impact on Verso's revenues and profitability will be more significant than we previously anticipated," S&P analyst Andy Sookram said in a statement.

"As a result, the company's total adjusted leverage will likely increase to well above 10x, a level that we would consider to not be consistent with the previous B rating," Sookram said.

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