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Verso Paper Corp. Reports First Quarter 2012 Results

Stocks in this article: VRS

Verso reported a net loss of $73.9 million in the first quarter of 2012, or $1.40 per diluted share, which included $34.9 million of charges from special items, or $0.66 per diluted share, primarily due to debt refinancing and unrealized hedge losses. Verso had a net loss of $44.6 million, or $0.84 per diluted share, in the first quarter of 2011, which included $26.5 million of charges from special items, or $0.50 per diluted share, primarily due to losses associated with debt refinancing.

“Our EBITDA results for the first quarter of 2012 are pretty much in line with what we expected. Compared to the first quarter of last year when volumes were exceptionally high, the current quarter was also impacted, primarily in the commercial print area, by sluggishness in advertising spending. Additionally, pulp prices were almost $90 per ton below last year’s levels and, although input prices eased compared to the fourth quarter of 2011, they were significantly higher than last year’s first quarter,” said Mike Jackson, President and Chief Executive Officer of Verso.

“Having said that, we anticipate both pulp and paper prices will gain positive momentum as we move into the latter part of the second quarter and continuing into the busier second half of the year. We have announced price increases for our paper products, and there have already been three pulp price increase announcements made over the last few months. We also should see more moderate input price impact going forward.

“During the first quarter, we attained our best ever safety performance with a total incident rate of .74 and a lost work day rate of zero. These results are indicative of total employee engagement and have a positive influence on costs.

“We continue to focus on our capital structure, refinancing our existing senior secured notes due 2014 with new senior secured notes due 2019. We received commitments from lenders for new senior credit facilities consisting of a $150.0 million asset-based loan revolving credit facility and a $50.0 million cash-flow revolving credit facility, which we entered into on May 4. These facilities replace our existing $200.0 million revolving credit facility which expires in August 2012. On May 11 we successfully completed exchange offers for almost all of our second priority senior secured floating rate notes due 2014 and for a portion of our senior subordinated notes due 2016, both of which will extend our maturity dates to 2019. In total, we refinanced approximately $840 million of 2012-2016 maturities with 2017 and 2019 maturities, and improved our weighted average maturity from 2015 to 2018, while at the same time capturing significant debt discount and improving our financial flexibility. We believe these transactions ensure Verso remains on strong footing and serve to enhance shareholder value.”

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