Verso Paper closes IPO of 14M shares

Coated paper company Verso Paper Corp. said Tuesday that it has closed its initial public offering of 14 million shares.

In its prospectus filed with the Securities and Exchange Commission, Verso said a reduced paper supply has allowed the company to raise prices on its paper. Supply has dropped as rising input costs, higher energy prices and the stronger Canadian dollar have sparked plant closures and reduced North American capacity.

However, that was not enough to attract investors to the IPO in a difficult market for new issues. The company's stock has dropped more than 13 percent since its IPO priced at $12 per share last Wednesday. Originally, the IPO was expected to total nearly 18.8 million shares and price between $16 and $18 each.

Verso plans to use the net proceeds from the offering to repay $153.3 million of debt and related prepayment fees.

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 retained a 67 percent interest in the company. Supercalendered paper is smooth, thin paper typically used in magazines and catalogs.

Credit Suisse Securities and Citigroup Global Markets were the IPO's lead underwriters. Deutsche Bank Securities, JP Morgan Securities, Lehman Brothers, Merrill Lynch, Morgan Stanley and Utendahl Capital Partners also served as underwriters.

Verso shares gained 15 cents to $10.40 in afternoon trading.