Odd Verso-NewPage Structure Eyed Warily by Wall Street

The proposed merger of NewPage and Verso Paper would create a sort of two-headed beast—a prospect that seems to have Wall Street both baffled and concerned. It appears that NewPage would only be on the hook for debts related to the current NewPage assets rather than those of the combined company.

That arrangement was presumably made to satisfy NewPage’s bondholders, who would be understandably reluctant to take on Verso’s much riskier debt.

NewPage would pay Verso to take over such functions as purchasing, customer service, logistics, marketing, finance, legal, technology, operations, and manufacturing services.