Busted IPO: Verso Paper Corp. (VRS, IP)

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Verso Paper Corp. (NYSE: VRS) was one we noted yesterday as "slashing terms" after the pricing level was dropped and the share count in the sale was dropped.  The company priced 14 million shares at $12.00 a piece, and shares are now under $10.00.  It’s also only the first day.

Verso was formed as an independent company that was acquired out of International Paper in the last few years, and the problem here is that the company’s use of funds is to repay debt that was used to pay Apollo Management L.P. a dividend last year.

Many investors don’t mind buying from private equity in an IPO, particularly if the investor group made the company stronger.  But investors often shy away from deals where all of the funds are directly or indirectly are going away from the company.

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Jon C. Ogg
May 15, 2008

Jon Ogg produces and edits the "10 Stocks Under $10" newsletter and he does not own securities in the companies he covers.