PORTLAND — Verso Paper’s chief executive said his company’s bid to acquire NewPage, the country’s largest coated paper producer, is on track after taking steps to restructure the company’s debt.

Verso owns mills in Jay and Bucksport that employ roughly 1,450 people. NewPage owns a mill in Rumford that employs 850 people.

More than half of Verso’s bondholders have agreed to a transaction called an exchange offer, which would reduce the company’s debt, according to a prepared statement.

“Completing the exchange offers us an important step toward completing our acquisition of NewPage, which, pending antitrust clearance and the exchange offers closing, is still expected to close in the second half of 2014,” Verso President and CEO Dave Paterson said in the statement.

Verso’s proposed $1.4 billion purchase of NewPage would create the largest single paper company in Maine, which would employ about one-third of the state’s paper industry workers and control more than half of the coated paper market in North America.

Both coated paper producers have faced challenges in recent years from a reduction in print advertising, increasing adoption of electronic readers and competition from paper mills abroad.

Verso said in its latest statement that 54 percent of a specific group of bondholders agreed to an exchange offer that would alter the terms of the company debt they now hold and, on completion of the merger, convert some of that debt into equity in the merged company.

Credit rating agency Moody’s has held a negative outlook on Verso’s credit since announcement of the deal, and in June it downgraded ratings on a variety of the company’s credit and bonds and raised a rating assessing the probability that Verso would not be able to pay some of its debts.

The ratings agency also expressed skepticism about the deal’s ability to clear an antitrust review, saying the merger “is becoming less likely to occur as the Department of Justice continues its review.”

If successful, however, the ratings agency said the merger could benefit Verso.

“If the merger closes and Verso is able to successfully integrate the operations of NewPage, improve its ability to cope with the declining coated paper industry through improved management of operating capacity and obtain significant synergies, Verso … might be upgraded,” the Moody’s report stated.

The exchange offer advances merger talks from February, when NewPage’s board of directors said it would not approve the deal without an exchange offer and a reduction in Verso’s debt.

Verso, which is based in Memphis and owned by private equity firm Apollo Global Management, operates a third mill in Quinnesec, Mich. The company’s total annual production is 1.5 million tons of coated paper. Its annual sales in 2012 were $1.5 billion.

NewPage, headquartered in Miamisburg, Ohio, also operates seven other mills in Kentucky, Maryland, Michigan, Minnesota and Wisconsin. Its annual production capacity is 3.5 million tons of coated paper. It had $3.1 billion in sales in 2012.

Copy the Story Link