Three hedge funds trying to take control of NewPage already own rival Verso Paper and have a major stake in AbitibiBowater, a published report said Monday night.
The "vulture trio" has scooped up more than 50% of NewPage's second-lien bonds in a "loan to own" maneuver, betting that they will be in the driver's seat when NewPage goes into financial collapse, according to a Debtwire article that appeared in the Financial Times. Five different analysts told Debtwire that NewPage could run out of cash this year.
The trio includes Apollo Management, which has a controlling interest in Verso, and Avenue Capital, which is likely to hold "a large stake" in AbitibiBowater when that company emerges from Chapter 11 bankruptcy reorganization, the article said.
Verso and NewPage together control about 55% of the North American coated freesheet market and 50% of the continent's coated groundwood market. Throw in AbitibiBowater and the CGW share would jump to about 65% and the supercalendered share would surpass 50%.
"Granted, any transaction that involves the potential for such massive consolidation will invite heavy scrutiny from antitrust regulators," the article said. "But the radical repricing afflicting the paper industry" may remove the legal hurdles.
From the NewPage 10-K:
ReplyDeleteThe federal net operating loss carryforward at December 31, 2009 was $2,044 and expires between 2021 and 2029. The Canadian federal net operating loss carryforward available to reduce Canadian federal taxable income at December 31, 2009 was C$1,105 and expires between 2025 and 2027.
Merger with Verso, if majority ownership does not technically "change" could open the door for using some of these NOLs. The value is up to $3 Billion with a B. Arguably more than NewPage is worth as a going concern in a re-org.