K&F Industries gets required consents from holders of nearly all 9¼% and 9 5/8% notes

News York, Nov. 5 - K&F Industries Inc. said it received the required number of consents to proposed indenture amendments from the holders of its 9¼% senior subordinated notes due 2007 and its 9 5/8% senior subordinated notes due 2010, as part of its tender offers for those notes and the related consent solicitations.

K&F said that as of the expiration of the common consent deadline, which occurred at 5 p.m. ET on Nov. 4, without extension, holders of 99% of the 9¼% notes and 95% of the 9 5/8% notes had tendered their notes and had delivered the related consents, well over the required majority of each issue needed to satisfy the respective consent conditions. Note tenders and consents delivered by the consent deadline may not be withdrawn or revoked.

The company and U.S. Bank NA, the notes' indenture trustee, plan to execute supplemental indentures incorporating the amendments, although the changes will not take effect until the company purchases validly tendered notes of the respective series to consummate the tender offers.

The underlying tender offers for the notes meanwhile continue and are scheduled to expire on Nov. 18.

As previously announced, K&F Industries, a New York-based maker of aircraft wheels and brake systems, said on Oct. 20 that it had begun cash tender offers to purchase any and all of its $145 million of outstanding 9¼% notes and its $250 million of outstanding 9 5/8% notes and was also soliciting the consent of the noteholders to proposed indenture changes that would eliminate substantially all of the restrictive covenants and certain events of default. K&F said that it was undertaking the tender offers in connection with the proposed acquisition of the company by AAKF Acquisition Inc., an affiliate of Aurora Capital Group.

K&F set a now-expired consent deadline for both offers of 5 p.m. ET on Nov. 4 and said that the price to be paid for the 9 5/8% notes would be set at 2 p.m. ET two business days after the consent date (i.e., Nov. 8) that the tender offers would expire at 5 p.m. ET on Nov. 18, subject to possible extension.

The company said that holders tendering their 9¼% notes by the consent deadline would receive total consideration of $1,020 per $1,000 principal amount of notes tendered and accepted for purchase, which includes a consent payment of $30 per $1,000 principal amount.

It said that holders tendering their 9 5/8% notes by the consent deadline would receive total consideration to be determined via a formula based on a reference security (the 2 5/8% U.S. Treasury note due Nov. 15, 2006). The total consideration will be equal to the present value on the applicable payment date of the sum of (i) $1,048.13 (the redemption price K&F would be required to pay to redeem each $1,000 principal amount of notes on the first call date of Dec. 15, 2006, plus (ii) all scheduled interest payments from the applicable payment date to the first call date.

K&F initially said that such present value would be determined on the basis of a yield to the first call date equal to the sum of (x) the bid-side yield to maturity of the reference security at 2 p.m. ET on the pricing date, plus a spread of (y) 100 basis points, minus (iii) accrued and unpaid interest from the last interest payment date up to, but not including, the applicable payment date. However, on Oct. 28, K&F increased the consideration for the 9 5/8% notes by reducing the spread over the reference security to be used in the pricing formula to 75 basis points from the originally announced 100 basis points, while leaving all other terms and conditions of the offer unchanged. The total consideration for the 9 5/8% notes will include the $30 per $1,000 principal amount consent payment.

Holders tendering their 9¼% or 9 5/8% notes after the consent deadline but before the offer expiration would receive the respective tender offer consideration (i.e., total consideration minus the consent payment), but would not receive the consent payment. All tendering holders will also receive unpaid and accrued interest up to but not including the applicable payment date.

K&F said that adoption of the proposed amendments would require the consent of holders of at least a majority of the outstanding principal amount of each series of notes. It said tendering holders would also be required to consent to the proposed amendments, and holders could not deliver consents without also tendering their notes. Holders tendering notes and delivering consents at any time before the consent deadline would not be able to withdraw their tenders or revoke their consents. Holders tendering after the consent deadline would be able to withdraw their tenders and revoke their consents at any time before the offers' respective expiration deadlines.

K&F said that the tender offers and related consent solicitations would be subject to, among other things, the closing of the acquisition of the company by Aurora and the completion by K&F of financing to fund consummation of the tender offers (K&F announced on Oct. 27 that its would offer to sell $365 million of new 10-year senior subordinated notes due 2014 in a Rule 144A deal to partly fund the tender offers).

It said that each tender offer would not be conditioned upon the completion of the other offer.

Lehman Brothers Inc. is the dealer manager for the tender offers and the solicitation agent for the consent solicitations (call the Liability Management Group at 800 438-3242 or call collect at 212 528-7581). D.F. King & Co. Inc. is the information agent (212 269-5550 or 800 628-8532).

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