NEW YORK (TheStreet) -- Shares of Verso Paper Corp. (VRS) are plunging, down -8.54% to $1.82, after it had been reported late Friday that the coated paper manufacturer's second-lien debt dropped to the lowest level in six months as Moody's Investors Service cut ratings three grades to reflect "very high credit risk," according to Bloomberg.
The $396 million of 8.75% securities due 2019 fell 1.25 cents to 40.5 cents on the dollar to yield 36.2% at 2:17 p.m. in New York, the lowest closing level since December 20, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority, Bloomberg noted.
Moody's reduced the company's rating today to Caa3 from B3 and expects a distressed exchange or a bankruptcy filing if Verso is unable to close on its $1.4 billion deal to buy paper company NewPage Holdings Inc., according to a statement from the credit grader.
TheStreet Ratings team rates VERSO PAPER CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate VERSO PAPER CORP (VRS) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and weak operating cash flow."