| BANKRUPTCY RELATED DISCLOSURES | BANKRUPTCY RELATED DISCLOSURES Chapter 11 Filing On the Petition Date, the Debtors filed the Chapter 11 Filings in the Bankruptcy Court. The Chapter 11 Filings constituted an event of default and automatic acceleration under the agreements governing all of the Predecessor’s debt (excluding the $23 million loan from Verso Finance Holdings to Chase NMTC Verso Investment Fund). The Chapter 11 Cases were consolidated for procedural purposes only and administered jointly under the caption “In re: Verso Corporation, et al., Case No. 16-10163.” During the pendency of the Chapter 11 Cases, Verso continued to manage its properties and operated our businesses as a “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Verso Finance, VPH and certain of its subsidiaries entered into the Verso DIP Facility (as defined in Note 9) for an aggregate principal amount of up to $100 million , and NewPage Corp and certain of its subsidiaries entered into the NewPage DIP ABL Facility (as defined in Note 9 ) for an aggregate principal amount of up to $325 million and the NewPage DIP Term Loan Facility (as defined in Note 9 ) for an aggregate principal amount of $350 million . The NewPage DIP Term Loan Facility consisted of $175 million of new money term loans and $175 million of loans that aggregated and replaced existing loans, or “NewPage DIP Roll Up Loans,” to refinance loans outstanding under the existing term loan facility of NewPage Corp that were outstanding on the Petition Date. We operated in the normal course of business during the reorganization process. Unless otherwise authorized by the Bankruptcy Court, the Bankruptcy Code prohibited us from making payments to creditors for goods furnished and services provided prior to the Petition Date. Vendors were, however, paid for goods furnished and services provided after the Petition Date in the ordinary course of business. Plan of Reorganization and Emergence from Chapter 11 On March 26, 2016, the Debtors filed the Plan with the Bankruptcy Court together with a disclosure statement in respect of the Plan. The Plan set forth, among other things, the treatment of claims against and equity interests in the Debtors. On June 23, 2016, the Bankruptcy Court entered the Confirmation Order, confirming the Plan. On the Effective Date, the Plan became effective pursuant to its terms and the Debtors emerged from their Chapter 11 Cases. Key components of the Plan included: • Entry into an asset-based loan facility and a term loan facility upon emergence from Chapter 11 on July 15, 2016. These Credit Facilities (as defined in Note 9 ) provided exit financing in an amount sufficient to repay in full all amounts outstanding under the Verso debtor-in-possession credit agreements of VPH and its subsidiaries, pay fees and expenses related to the facilities and the emergence of Verso and its subsidiaries from bankruptcy. ◦ The satisfaction in full, in cash, of claims under the Verso DIP Facility, claims under the NewPage DIP ABL Facility, claims relating to the $175 million of new money term loans under the NewPage DIP Term Loan Facility and claims entitled to administrative expense or priority status under the Bankruptcy Code. • Issuance of 34,390,643 shares of stock or 100% of Verso’s equity (subject to dilution by warrants issued to certain creditors described below, or “Plan Warrants,” and equity issuable to our employees under a management incentive plan) to our existing creditors in exchange for the cancellation of all of the Debtors’ pre-petition indebtedness (principal and interest) existing as of the date of bankruptcy totaling $2.6 billion . ◦ Holders of first-lien secured debt issued by VPH, including lenders under VPH’s revolving credit facilities and the holders of VPH’s 11.75% senior secured notes due 2019 (issued in 2012 and 2015), received 17,195,319 shares of Class A common stock, $0.01 par value, or “Class A Common Stock,” or 50% of Verso’s equity and Plan Warrants to purchase 1,810,035 shares of Class A Common Stock at an initial exercise price of $27.86 . ◦ Lenders under the NewPage Corp senior secured term loan and the $175 million of “rolled up” term loans under the NewPage DIP Term Loan Facility, collectively, received 15,139,745 shares of Class A Common Stock and 1,023,859 shares of Class B common stock, $0.01 par value, or “Class B Common Stock,” or 47% of Verso’s equity. ◦ Holders of VPH’s senior debt received 980,133 shares of Class A Common Stock or 2.85% of Verso’s equity. ◦ Holders of VPH’s subordinated (unsecured) debt received 51,587 shares of Class A Common Stock or 0.15% of Verso’s equity. • All general unsecured claims were satisfied in full for an aggregate settlement totaling $3 million in cash (except with respect to general unsecured claims against Debtors that have only de minimis assets, which have received no distributions under the Plan). • All shares of Verso’s common stock issued and outstanding immediately prior to the Effective Date were cancelled and discharged. • The shared services agreement between Verso, NewPage and NewPage Corp was terminated. • The prior employee incentive plans and other employment agreements were terminated and any awards issued under them were no longer honored, and a new performance incentive plan was adopted by Verso. See “Performance Incentive Plan” below. • The Management and Transaction Fee Agreement dated as of August 1, 2006 among Verso Paper LLC, Verso Paper Investments LP, Apollo Management V, L.P. and Apollo Management VI, L.P., and all rights and remedies thereunder were terminated, extinguished, waived and released. • Employee retirement contracts and collective bargaining agreements were honored by Verso upon emergence. Plan Warrants On the Effective Date, and in accordance with the Plan, warrants to purchase up to an aggregate of 1,810,035 shares of Class A Common Stock were issued to holders of first-lien secured debt holders. Each Plan Warrant has a seven year term (commencing on the Effective Date) and has an initial exercise price of $27.86 per share of Class A Common Stock. The warrant agreement governing the Plan Warrants, or the “Warrant Agreement,” contains customary anti-dilution adjustments in the event of any stock split, reverse stock split, reclassification, stock dividend or other distributions. In addition, the Warrant Agreement provides for anti-dilution adjustments in the event of below market stock issuances at less than 95% of the average closing price of the Class A Common Stock for the 10 consecutive trading days immediately prior to the applicable determination date, and for pro rata repurchases of Class A Common Stock. The fair value of the Plan Warrants was estimated on the Effective Date using the Black-Scholes option pricing model. The weighted average assumptions used included a risk free interest rate of 1% , an expected stock price volatility factor of 37% and a dividend rate of 0% . The aggregate fair value of the Plan Warrants was $10 million on the Effective Date. Performance Incentive Plan On the Effective Date, pursuant to the operation of the Plan, the Verso Corporation Performance Incentive Plan became effective. The maximum number of shares of Class A Common Stock that may be issued or transferred pursuant to awards under this plan is 3,620,067 . The Compensation Committee of the Board of Directors is the administrator of the Verso Corporation Performance Incentive Plan. There were no stock awards issued on the Effective Date pursuant to the Plan. Reporting During Bankruptcy During the pendency of the Debtors’ Chapter 11 Cases, expenses, gains and losses directly associated with reorganization proceedings were reported as Reorganization items, net in the Consolidated Statements of Operations and liabilities subject to compromise in the Chapter 11 Cases were segregated from liabilities of non-filing entities, fully secured liabilities not expected to be compromised and from post-petition liabilities. In addition, effective as of the Petition Date and during the pendency of the Debtors’ Chapter 11 Cases, the Company ceased recording contractual interest expense on the outstanding pre-petition debt classified as Liabilities subject to compromise or “LSTC”. Upon the Debtors’ emergence from our Chapter 11 Cases, the Company settled and extinguished or reinstated liabilities that were subject to compromise. Fresh-Start Accounting Under ASC 852, Reorganizations , fresh-start accounting is required upon emergence from Chapter 11 if (i) the value of the assets of the emerging entity immediately before the date of confirmation is less than the total of all post-petition liabilities and allowed claims; and (ii) holders of existing voting shares immediately before confirmation receive less than 50% of the voting shares of the emerging entity. The Company qualified for and adopted fresh-start accounting as of the Effective Date. Adopting fresh-start accounting results in a new reporting entity with no beginning retained earnings or deficits. The cancellation of all existing shares outstanding on the Effective Date and issuance of new shares of the reorganized entity caused a change of control of the Company under ASC 852. Adoption of fresh-start accounting resulted in Verso becoming a new entity for financial reporting purposes and the recording of the Company’s assets and liabilities at their fair value as of the Effective Date in conformity with ASC 805, Business Combinations . The fair values of the Company’s assets and liabilities as of that date differed materially from the recorded values of its assets and liabilities as reflected in its historical consolidated financial statements. In addition, the Company’s adoption of fresh-start accounting materially affected its results of operations following the fresh-start reporting date, as the Company had a new basis in its assets and liabilities. The Company also adopted various new accounting policies in connection with its adoption of fresh-start accounting. Consequently, the Company’s financial statements on or after the Effective Date are not comparable with the financial statements prior to that date and the historical financial statements before the Effective Date are not reliable indicators of its financial condition and results of operations for any period after it adopted fresh-start accounting. Reorganization Value Reorganization value is the value attributed to an entity emerging from bankruptcy, as well as the expected net realizable value of those assets that will be disposed before emergence occurs. This value is viewed as the value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the assets of the entity immediately after emergence. Fresh-start accounting requires that the reporting entity allocate the reorganization value to its assets and liabilities in relation to their fair values upon emergence from Chapter 11. The Company’s valuation of the reorganized Company dated as of April 27, 2016 , which was included in the disclosure statement related to the Plan, purported the estimated enterprise value of the Company to be in a range between $ 1.05 billion and $ 1.10 billion . The estimated enterprise value, which was approved by the Bankruptcy Court, included the equity value in a range between $675 million and $725 million . As part of determining the reorganization value as of July 15, 2016, the Company estimated the equity value of the Successor to be $675 million and the reorganization value to be approximately $2 billion . As the Company issued 100% of its equity to existing creditors in exchange for the cancellation of all pre-petition indebtedness upon confirmation of the Plan, the distribution of the Company’s equity in settlement of pre-existing indebtedness was the primary objective of the Plan. Accordingly, Verso’s equity value represents the primary assumption utilized by the Company in the determination of reorganization value. The Company believes that an equity value at the low-end of the range of $675 - $725 million was appropriate due to declines in projected operating performance from the submission of the Plan through the Effective Date. In order to determine the reorganization value, Verso estimated the enterprise value of the Successor utilizing the discounted cash flow analysis, comparable company analysis and precedent transaction analysis. The use of each approach provides corroboration for the other approaches. To estimate the fair value utilizing the discounted cash flow analysis, Verso established an estimate of future cash flows for the period from 2016 to 2025 and discounted the estimated future cash flows to the present value. The expected cash flows for the period 2016 to 2025 were derived from earnings forecasts and assumptions regarding growth and margin projections, as applicable, and expressed as a multiple of EBITDA (defined below). The discount rate of 9.5% was estimated based on an after-tax weighted average cost of capital reflecting the rate of return that would be expected by a market participant. To estimate the fair value utilizing the comparable company analysis, Verso estimated the value of the Company based on a relative comparison with other publicly traded companies with similar operating and financial characteristics. Under this methodology, valuation multiples, derived from the operating data of publicly-traded benchmark companies such as the projected financial measures of revenue and earnings before interest, taxes, depreciation and amortization, or “EBITDA” were applied to projected operating data of Verso. To estimate the fair value utilizing the precedent transaction analysis method, Verso determined an estimate of value by examining merger and acquisition transactions involving paper companies. The valuation paid in such acquisitions or implied in such mergers were analyzed as ratios of various financial results. These transaction multiples were calculated based on the purchase price (including any debt assumed) paid to acquire companies that are comparable to Verso. The fair value of the Plan Warrants was estimated on the Effective Date using the Black-Scholes option pricing model with the following assumptions. The weighted average assumptions used included a risk free interest rate of 1% , an expected stock price volatility factor of 37% and a dividend rate of 0% . The aggregate fair value of the Plan Warrants was determined to be $10 million on the Effective Date, therefore the residual common stock value was determined to be $665 million . The following table reconciles the equity value to the estimated reorganization value as of the Effective Date (dollars in millions): Value of Successor Stock $ 665 Add: Fair value of Plan Warrants 10 Equity Value 675 Add: Fair value of long-term debt 318 Add: Other non-interest bearing liabilities 1,021 Less: Debt issuance costs (8 ) Reorganization value of Successor assets $ 2,006 The fair value and carrying value of debt represented $318 million of borrowings under the Credit Facilities on the Effective Date. The fair value of long-term debt was determined based on a market approach utilizing market yields and was estimated to be approximately 94% of the par value or less $22 million original issue discount on the Term Loan Facility - (as defined in Note 9 ). The Company’s reorganization value was allocated to its assets and liabilities in conformity with ASC 805 . The valuation of the Company’s assets and liabilities in connection with fresh-start accounting include the following general valuation approaches: • The income approach was used to estimate value based on the present value of future economic benefits that are expected to be produced; • The market approach was used to estimate the value through the analysis of recent sales of comparable assets or business entities; and • The cost approach was used to provide a systematic framework for estimating the value of tangible assets or intangible assets based on the economic principal of substitution. The significant assumptions related to the valuation of the Company’s assets are included in the footnotes to the Fresh-Start Balance sheet below. Most valuation inputs, related to inventory, property, plant and equipment, and intangible assets are considered to be Level 3 inputs as they are based on significant inputs that are not observable in the market. Reorganization Adjustments The consolidated financial information below gives effect to the following Reorganization Adjustments, the Plan and the implementation of the transactions contemplated by the Plan. These adjustments give effect to the terms of the Plan and certain underlying assumptions, which include, but are not limited to, the following: • Borrowing of $318 million from the Credit Facilities; • Issuance of 34,390,643 shares of stock or 100% of Verso’s equity and Plan Warrants to purchase an aggregate of 1,810,035 shares of Class A Common Stock in exchange for the cancellation of all of our pre-petition indebtedness existing as of the Petition Date totaling $2.6 billion ; • Payment for the satisfaction of general unsecured claims in aggregate settlement totaling $3 million ; and • Repayment of $279 million of liabilities under the DIP Facilities (as defined in Note 9). Fresh-Start Balance Sheet The following fresh-start balance sheet as of the Effective Date, July 15, 2016, illustrates the financial effects on the Company of the implementation of the Plan and the adoption of fresh-start accounting. This fresh-start balance sheet reflects the effect of the completion of the transactions included in the Plan, including the issuance of successor equity and the settlement of old indebtedness. Reorganization adjustments, shown in column 2 of the following schedule, represent amounts recorded on the Effective Date for the implementation of the Plan, including the settlement of liabilities subject to compromise and related payments, the issuance of new shares of common stock and new warrants, repayment of the DIP Facilities and cancellation of Predecessor common stock. Fresh-start adjustments, as shown in column 3 of the following schedule, represent amounts recorded on the Effective Date as a result of the adoption of fresh-start accounting, which resulted in Verso becoming a new entity for financial reporting purposes. The Company’s assets and liabilities have been recorded at fair value as of the fresh-start accounting date or Effective Date. (Dollars in millions) Predecessor Reorganization Adjustments Fresh-Start Adjustments Successor ASSETS Current assets: Cash and cash equivalents $ 27 $ 20 (a) $ — $ 47 Accounts receivable, net 201 — (2 ) 199 Inventories 503 — (14 ) (l) 489 Prepaid expenses and other assets 27 (3 ) — 24 Total current assets 758 17 (16 ) 759 Property, plant and equipment, net 1,660 — (480 ) (m) 1,180 Intangibles and other assets, net 97 — (30 ) (n) 67 Total assets $ 2,515 $ 17 $ (526 ) $ 2,006 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 103 $ 41 (b) $ — $ 144 Accrued liabilities 140 10 (c) 2 152 Current maturities of long-term debt 461 (443 ) (d) — 18 Total current liabilities 704 (392 ) 2 314 Long-term debt — 292 (e) — 292 Other liabilities 597 5 (f) 123 (o) 725 Liabilities subject to compromise 2,535 (2,535 ) (g) — — Total liabilities 3,836 (2,630 ) 125 1,331 Commitment and contingencies Equity: Predecessor preferred stock — — — — Successor preferred stock — — — — Predecessor common stock 1 (1 ) (h) — — Successor common stock — — (i) — — Treasury stock (1 ) 1 (h) — — Predecessor paid-in capital 322 (322 ) (h) — — Successor paid-in-capital — 665 (i) — 665 Warrants — 10 (j) — 10 Retained earnings (deficit) (1,541 ) 2,294 (k) (753 ) (p) — Accumulated other comprehensive loss (102 ) — 102 (p) — Total equity (deficit) (1,321 ) 2,647 (651 ) 675 Total liabilities and equity $ 2,515 $ 17 $ (526 ) $ 2,006 Reorganization Adjustments (a) Reflects payments and receipts recorded as of the Effective Date as follows (dollars in millions): Sources: Amount borrowed under the Credit Facilities $ 340 Less discount on Term Loan Facility (22 ) Total Sources 318 Uses: Repayment of DIP facility (principal and interest) (279 ) Payment of deferred financing costs on exit financing (8 ) Payment of professional fees (8 ) Aggregate settlement of unsecured claims (3 ) Total uses (298 ) Net source $ 20 (b) Represents recognition of accounts payable related to the cure of defaults for assumed executory contracts and leases. (c) Primarily represents recognition of accrued liabilities for success-based professional fees upon the Company’s emergence from its Chapter 11 Cases. (d) Represents the short-term portion of borrowing pursuant to the Term Loan Facility net of the payment of the principal balance of the NewPage DIP Facilities and settlement of the NewPage DIP Roll Up Loan (dollars in millions): Short-term portion of Term Loan $ 18 Payment of the NewPage DIP Facilities (278 ) Settlement of NewPage DIP Roll Up Loans (183 ) $ (443 ) (e) Represents the long-term portion of the Term Loan Facility and ABL Facility net of debt issuance costs as follows (dollars in millions): ABL Facility Borrowing $ 120 Term Loan Facility Borrowing 220 Debt Discount (22 ) Debt issuance costs (8 ) Less: Current Portion (18 ) Long-term Debt $ 292 (f) Primarily represents the reinstatement of certain pre-petition liabilities from LSTC. (g) LSTC under the Plan reflected the Company’s estimate of pre-petition liabilities and other expected allowed claims to be addressed by the Chapter 11 Cases. Debt amounts excluded related unamortized deferred financing costs, discounts/premiums and deferred gains which were written off to Reorganization items, net, in the Consolidated Statement of Operations prior to our emergence from bankruptcy. Amounts classified to LSTC did not include pre-petition liabilities that were fully collateralized by letters of credit or cash deposits. Borrowing under the NewPage DIP Roll-Up Notes represented borrowing during the pendency of the Company’s bankruptcy and were settled in exchange for stock as described above. Both the LSTC and NewPage DIP Roll-Up Notes were resolved and satisfied as of the Effective Date. This entry records the settlement of LSTC and the NewPage DIP Roll Up Loans (dollars in millions): Settlement of LSTC debt $ (2,324 ) Settlement of LSTC accrued interest (126 ) Settlement of LSTC accounts payable and accrued liabilities (85 ) Settlement of LSTC (2,535 ) Settlement of NewPage DIP Roll-Up Loans (principal and interest) (184 ) Reinstatement of certain liabilities from LSTC 49 Cash paid for the satisfaction of unsecured claims in aggregate settlement 3 Issuance of New Common Stock 665 Issuance of Plan Warrants 10 Net gain on settlement of LSTC and DIP Roll-Up Loans $ (1,992 ) (h) Reflects the cancellation of Predecessor equity. (i) Reflects the issuance of 34,390,643 shares of common stock, or 100% of the Company’s equity (subject to dilution by Plan Warrants issued to certain creditors and equity that may be issued to our employees under the management incentive plan) to existing creditors for the cancellation of indebtedness. (j) Reflects the issuance of Plan Warrants to purchase up to 1,810,035 shares of Class A Common Stock at an initial exercise price of $27.86 issued to holder of first-lien secured debt holders in exchange for the cancellation of indebtedness. (k) Reflects the cumulative impact of the reorganization adjustment discussed above (dollars in millions): Gain on settlement of LSTC $ 1,992 Professional fees paid at emergence (8 ) Success fees accrued at emergence (12 ) Net gain on reorganization adjustments 1,972 Cancellation of Predecessor equity (1) 322 Net impact to Retained earnings $ 2,294 (1) Net of recognition of previously unamortized stock compensation cost of the Predecessor. Fresh-Start Adjustments (l) An adjustment of $14 million was recorded to decrease the book value of inventories to their estimated fair value as follows (dollars in millions): Replacement parts and other supplies $ (52 ) Work-in-process and finished goods 38 $ (14 ) • The fair value of work-in-process was determined based on the estimated selling price once completed less costs to complete the manufacturing effort, costs to sell including disposal and holding period costs, and a reasonable profit margin. • The fair value of finished goods inventory was determined based on the estimated price to sell including disposal and holding period costs and a reasonable profit margin on the selling and disposal. • The fair value of replacement parts and other supplies was determined based upon the cost approach. This approach considers the amount required to purchase a new asset of equal utility at current market prices, with adjustments in value for functional and economic obsolescence. Functional obsolescence is the loss in value of usefulness of an asset caused by inefficiencies or inadequacies of the asset itself, when compared to a more efficient or less costly replacement parts that a new technology has developed. Economic obsolescence is the loss in value of usefulness of an asset due to factors external to the asset such as the cost of materials, related demand for the product, increased competition and environmental regulations. (m) Represents the adjustment to reduce the net book value of Property, plant and equipment, net to fair value. The adjustment to the fair value of Property, plant and equipment, net was attributable to an adjustment of $382 million to machinery and equipment and an adjustment of $98 million to real estate. The fair value of the machinery and equipment was determined as follows: • The cost approach was utilized to determine the fair market value of machinery and equipment. This approach considers the amount required to construct or purchase a new asset of equal utility at current market prices, with adjustments in value for functional and economic obsolescence. Functional obsolescence is the loss in value of usefulness of an asset caused by inefficiencies or inadequacies of the property itself, when compared to a more efficient or less costly replacement property that a new technology has developed. Economic obsolescence is the loss in value of usefulness of an asset due to factors external to the asset such as the cost of materials, related demand for the product, increased competition and environmental regulations. • The sales approach was also used to determine the fair market value of machinery and equipment. The principal behind this approach is the value of the asset is equal to the market price of an asset with comparable features such as design, location, size, construction materials, use, capacity, specifications, operational characteristics, technology level, accessories and other features that may impact value or marketability. • The income approach was also used to determine the fair market value of machinery and equipment. The principal behind this approach is the value of the asset is equal to the earnings potential of the assets such as the net rental savings attributable to owning the asset. The adjustment related to real estate fair value was determined as follows: • The market approach was utilized to determine the fair market value of real estate. This approach considers comparable land sale data and land held for sale. Variances in market conditions at the time of sale, property characteristics and other relevant factors were considered and analyzed when necessary. • Land and building improvements were valued using the cost approach which considers the replacement cost of the improvement. (n) An adjustment of $30 million was recorded to decrease the book value to fair value of Intangibles and other assets, net to estimated fair value as follows (dollars in millions): Successor Trade Names $ 16 Successor Customer Relationships 26 Write-off of Predecessor intangible and other assets (72 ) $ (30 ) (o) Represents an adjustment to the fair value of pension and postretirement obligations totaling $135 million , off-set by the write-off of $8 million of tax liabilities resulting from the Reorganization Adjustments, and other adjustments to asset retirement obligations and workers’ compensation reserves. (p) Reflects the cumulative impact of fresh-start adjustments as discussed above and shown in the table below and the elimination of the Predecessor accumulated other comprehensive income (dollars in millions): Accounts receivable, net $ (2 ) Inventory (14 ) Write down Property, plant and equipment, net (480 ) Record fair value of Intangibles and other assets (30 ) Accrued liabilities (2 ) Other long-term liabilities 4 Pension (135 ) Change in deferred taxes 8 Total loss recorded as a result of Fresh-Start Accounting (651 ) Elimination of Predecessor accumulated other comprehensive loss (102 ) Net impact on Retained earnings (deficit) $ (753 ) Contractual Interest Effective January 26, 2016, Verso discontinued recording interest expense on outstanding pre-petition debt classified as LSTC. The table below shows contractual interest amounts for debt classified as LSTC calculated in accordance with the respective agreements without giving effect to any penalties as a result of the default on such agreements, which are amounts due under the contractual terms of the outstanding debt. Interest expense reported in the Consolidated Statement of Operations for the period January 1, 2016 through July 14, 2016 (Predecessor) does not include $123 million , per the table below, in contractual interest on pre-petition debt classified as LSTC, which was stayed by the Bankruptcy Court effective on the Petition Date. January 26, 2016 Through (Dollars in millions) July 14, 2016 VPH $ 98 NewPage Corp 25 Total contractual interest $ 123 Reorganization items, net Expenses and income directly associated with the Chapter 11 Cases are reported separately in the Consolidated Statements of Operations as Reorganization items, net as required by ASC 852. Reorganization items, net include adjustments to reflect the carrying value of LSTC at their estimated allowed claim amounts, as such adjustments are determined. The following table presents reorganization items incurred in the period from January 26, 2016 through July 14, 2016 (Predecessor), as reported in the Consolidated Statement of Operations: January 26, 2016 Through (Dollars in millions) July 14, 2016 Net gain on settlement of LSTC and DIP Roll-Up Notes $ (1,992 ) Total loss recorded as a result of Fresh-Start Accounting 651 Professional fees 52 DIP financing cost 22 Write-off of unamortized deferred financing costs, discounts/premiums and deferred gains (1) (81 ) Contract modifications and rejections, net 14 Other (4 ) Total reorganization items, net $ (1,338 ) (1) Primarily represents $116 million of non-cash reorganization gain off-set by non-cash reorganization expense of $35 million . The gains are recognized as the difference between the Petition Date carrying values of certain Verso notes previously recorded as a troubled debt restructuring and their par value (estimated allowed claim) for such debt. The expenses represent the write-off of debt issuance costs and other carrying value adjustments. For the period from January 26, 2016 through July 14, 2016 (Predecessor), the cash used in reorganization items included $28 million of professional fees and $22 million of financing costs in connection with the DIP Facilities. For the period from July 15, 2016 through December 31, 2016 (Successor), cash used in reorganization items included $24 million for professional fees. The cash outflow is included in Net cash provided by operating activities in our Consolidated Statements of Cash Flows for the periods presented. Common Stock Privileges The 33,366,784 shares of Class A Common Stock and 1,023,859 shares of Class B Common Stock issued in connection with the cancellation of all of the Company’s pre-petition indebtedness are identical and entitle the holders thereof the same rights and privileges, except that the Class B Common Stock is not qualified for listing and trading on the New York Stock Exchange. One share of Class B Common Stock is convertible into one fully paid and non-assessable share of Class A Common Stock at the option of the holder thereof at any time upon written notice to the Company. |
