Verso launches $225 million term loan B at Libor plus 750 bps

By Sara Rosenberg

New York, June 6 – Verso Corp. launched on Monday its $225 million six-year term loan B (B2) with price talk of Libor plus 750 basis points with a 1% Libor floor and an original issue discount of 98, according to a market source.

The term loan B has 101 soft call protection for one year, amortization of 5% per annum and a maximum total net senior secured leverage covenant of 3.5 times.

Mandatory prepayments are from 100% of the net cash proceeds from non-permitted debt issuances, 100% of the net cash proceeds from non-ordinary course assets sales subject to a 12-month reinvestment period, and 50% excess cash flow sweep starting Jan. 1, 2017, stepping down to 25% at net first-lien leverage of 1 times and to 0% at net first-lien leverage of 0.50 times.

The company’s $575 million credit facility also includes a $350 million five-year ABL revolver.

Pricing on the revolver ranges from Libor plus 125 bps to 200 bps based on excess availability, the company disclosed in an 8-K filed with the Securities and Exchange Commission.

The revolver has an initial unused line fee of 37.5 bps. The fee can range from 25 bps to 37.5 bps based on utilization.

Under the term loan, the company has an incremental allowance of $25 million and unlimited first-lien debt subject to pro forma compliance with a net first-lien leverage ratio of 1.5 times.

The incremental allowance under the revolver is $25 million ABL incremental and an additional $50 million subject to pro forma net first-lien leverage of 1 times.

Commitments are due at 5 p.m. ET on June 20.

Barclays, Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC are the bookrunners on the term loan, and Wells Fargo Securities LLC and Barclays are the arrangers on the ABL revolver.

Proceeds will be used to help fund the company’s emergence from Chapter 11 bankruptcy.

Closing is expected in July.

Total debt to adjusted EBITDA is 1.4 times.

Verso is a Memphis-based producer of printing and specialty papers and pulp. The company filed for bankruptcy on Jan. 26 in the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 case number is 16-10163.

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