Verso Paper prices 14 million shares at $12 apiece

Shares of Verso Paper Corp. are expected to begin trading Thursday, a day after the coated paper company cut the number and price of shares to be offered in its initial public offering to 14 million shares at $12 apiece.

Previously, the IPO was expected to total nearly 18.8 million shares and price between $16 and $18 each.

Verso also reduced the number of shares it is offering the underwriters as part of an overallotment option to 2.1 million, from 2.8 million.

The company plans to use the $153.3 million in proceeds to repay debt.

Verso was formed in August 2006 by affiliates of private equity firm Apollo Global Management LLC to buy out the coated and supercalendered paper division of International Paper Co. Apollo will retain a 67 percent interest in the company following the IPO.

Supercalendered paper is a type of smooth, glossy paper.

The company's primary products are used in catalogs, magazines, annual reports, brochures, and retail inserts, and its customers include magazine publisher Conde Nast Publications, retailer and catalog merchant Sears Holdings Corp. and commercial printer RR Donnelley & Sons Co.

Verso operates 11 paper machines at four mills, which have a combined annual production capacity of 1.7 million tons of coated paper. Its main competitors include NewPage Corp., which announced plans for an IPO last week, AbitibiBowater Inc. and Sappi Ltd.

Recently, rising input costs, higher energy prices and the stronger Canadian dollar have sparked plant closures, reducing North American capacity. With a reduced supply and a steady demand, Verso has been able to raise prices on its paper and said in its prospectus with the Securities and Exchange Commission that it expects paper prices to continue to increase through 2008.

For the three months ended March 31, the company reported a profit of $4 million on sales of $453.9 million. This compares with a loss of $29.9 million on revenue of $359.8 million in the prior-year quarter.

Citigroup Global Markets Inc. and Credit Suisse Securities served as lead managers of the deal. Shares will trade on the New York Stock Exchange under the symbol "VRS."

(This version corrects the company's first-quarter results in paragraph 10.)