WILMINGTON, Del, Jan 26 (Reuters) - Verso Corp, a leading U.S. producer of printing and specialty papers, filed for Chapter 11 bankruptcy on Tuesday to cut its debt in the face of falling demand for catalogs and magazines and cheaper imports.
Verso, which is controlled by private equity firm Apollo Global Management, plans to seek approval for a plan that would shed $2.4 billion of its debt and would cede ownership of the company to its creditors, according to a company statement.
The company said it has support for the plan from a majority of its creditors in most classes of its debt. That could smooth the restructuring process, which needs to be approved by a formal vote of creditors.
The Memphis, Tennessee-based company owns eight manufacturing plants in six states and generated $2.4 billion in revenue in the first nine months of 2015, according to court records. It employs 5,172 people.
Verso’s products are used primarily in catalogs, magazines and glossy advertising brochures.
The company said the bankruptcy would have virtually no impact on its daily operations, and it is seeking to borrow up to $600 million to fund its business while it is in Chapter 11.
Verso acquired NewPage Corp a year ago to increase its scale, but the company has said that merger-related savings were more than offset by rising prices for wood, falling prices for its products and competition from imports that benefit from a strong dollar.
Verso said in court papers it had about $3.9 billion in debt and estimated its assets were worth about $2.9 billion.
NewPage had filed for bankruptcy protection in 2011 and emerged a year later.
Verso was acquired by Apollo in 2006 from International Paper, and went public in 2008. Its pink sheet stock was trading for less than a penny a share on Tuesday. (Reporting by Tom Hals in Wilmington, Delaware)