AK Steel completes consent solicitation

AK Steel Corp. (B1/BB) said on Thursday (Aug. 8) that it had it had successfully completed its previously announced solicitation of consents to proposed changes in the indentures governing its 7 7/8% senior notes due 2009, its 8 7/8% senior notes due 2008 and its 9% senior notes due 2007. That consent solicitation expired as scheduled on Aug. 7 without extension. AK Steel also said that it had obtained the requisite consents to concurrently amend its senior secured notes due 2004 (Ba2), to modify certain provisions of the agreement governing those notes.

AS PREVIOUSLY ANNOUNCED, AK Steel, a Middletown, Ohio-based producer of carbon, stainless and electrical flat-rolled steel, said on June 3 that it planned to sell $550 million of new 10-year notes in the Rule 144A market, and would use the expected proceeds of the offering to re-finance its 9 1/8% senior notes due 2006. AK did not at that time give a timetable for the expected refinancing of the existing notes. High yield syndicate sources heard that the company would begin a short roadshow for the new offering on June 4, with pricing likely for June 6 via book-running manager Credit Suisse First Boston and co-manager Goldman Sachs. On June 6, the syndicate sources reported that AKS had sold $550 million of new 7¾% senior notes due 2012. On June 11, the company said that it would redeem all $550 million of its outstanding 9 1/8% notes on July 11, financing the redemption with the proceeds from its recently completed sale of new 7¾% notes. AK Steel said the 9 1/8% notes would be redeemed at a price of 104.56% of their par value (i.e., $1,045.60 per $1,000 principal amount).

On July 12, AK Steel said that it had, in fact, redeemed all of its outstanding 9 1/8% notes as scheduled on July 11, funding the redemption with the proceeds of its recent sale of new 10-year notes.

On July 26, AK Steel said that it had begun soliciting the consents of the holders of record (as of July 31) of its 7 7/8%, 8 7/8% and 9% notes to the proposed indenture amendments, which were aimed at bringing certain provisions of the notes' indentures into line with the indenture for AK Steel's recently issued 7¾% senior notes due 2012. The company also said that it was concurrently seeking to amend its senior secured notes due 2004. The company said the consent solicitations would expire on Aug. 7, subject to possible extension. AK Steel said it would pay a $2.50 cash consent fee for each $1,000 principal amount of notes for which a consent was validly delivered and not revoked. It said that payments for the consents would be conditioned upon receiving consents from the holders of a majority of the outstanding notes.

Credit Suisse First Boston (call 800 820-1653 or 212 538-8474) was the lead solicitation agent for the consent solicitations. Georgeson Shareholder Services (call 800 530-3596 or 212 440-9800) was the information agent.

Mothers Work closes tender, calls remaining notes

Mothers Work, Inc. (B3/B+) said on Wednesday (Aug. 7) that that it has closed its previously announced tender offer for its outstanding 12 5/8% senior notes due 2005, which expired as scheduled at 9 a.m. ET on Aug. 7 without extension, and it has accepted for payment all validly tendered notes. As of that deadline, holders of the notes had tendered approximately 72% of the $92 million of outstanding notes, or $66.24 million, leaving $25.76 million still outstanding. The payment date for the accepted notes and related noteholder consents to proposed indenture changes is Aug. 7.

The company also issued a notice of redemption with respect to all notes that were not tendered in the tender offer. The remaining notes are to be redeemed at par. The company declined to specify the redemption date.

AS PREVIOUSLY ANNOUNCED, Mothers Work, a Philadelphia-based designer and retailer of maternity apparel, said on June 10 that it had filed two registration statements with the Securities and Exchange Commission in connection with the proposed public offering of $125 million of new senior notes and 1.1 million shares of common stock (1 million primary shares offered by the company and 100,000 secondary shares offered by certain selling stockholders, plus an additional 165,000 shares of common stock to be sold by the company and selling stockholders to cover over-allotments, if any). It said that the offering of the common stock would not be contingent on the closing of the concurrent offering of senior notes, although the senior note offering would be contingent on the closing of the common stock offering. High yield syndicate sources heard on June 10 that proceeds of the note sale - which is to be led by bookrunning manager Credit Suisse First Boston - would be used to repay the $91.09 million of outstanding 12 5/8% notes, to repay subordinated notes, to pay series A and series C preferred accrued dividends, to redeem series A preferred, to repurchase series C preferred, to repay bank debt and for general corporate purposes. The sources said that timing on the note deal was still to be determined.

On July 10, Mothers Work said that it was beginning a cash tender offer to purchase all of its outstanding 12 5/8% notes, as well as a solicitation of noteholder consents to proposed indenture amendments related to the company's refinancing of certain outstanding debt and the redemption or repurchase of certain of its preferred stock . It said that the consent solicitation would expire at 5 p.m. ET on July 23, and the tender offer would expire at 9 a.m. ET on Aug. 7, with both deadlines subject to possible extension. Mothers Work said that it would offer $1,002.50 per $1,000 principal amount of notes tendered by the consent deadline (thus consenting to the proposed indenture changes). That consideration would include a $2.50 per $1,000 principal amount consent payment. Noteholders tendering their notes after the consent date, but before the expiration deadline would receive the consideration minus the consent payment. All tendering holders would receive accrued and unpaid interest on their notes accepted for purchase up to, but not including, the payment date for the offer. Holders desiring to tender their notes under terms of the offer would have to consent to the proposed amendments and could not deliver consents without tendering the related notes. Holders could not revoke consents without withdrawing the related notes tendered under the offer. The company further said that notes tendered on or before the consent date could be withdrawn on or before that deadline, but not afterward. Notes tendered after consent deadline may not be withdrawn. The tender offer and the solicitation were subject to a number of conditions, including, among others, the consummation of Mothers Work's previously announced proposed offering of shares of common stock and its proposed offering of senior notes, as well as the tender of notes and the receipt of consents to the indenture changes from holders of at least a majority of the outstanding notes.

The proposed amendments - which would reduce the notice period for redemption of the notes and eliminate most of the principal restrictive covenants under the indenture - would become effective and will cover all of the notes, even those not purchased under the tender offer - if and when the offer were to be completed. To the extent that any notes remain outstanding after the completion of the offer, the company said it presently intends to redeem those notes.

On July 24, Mothers Work said that it had received the requisite amount of noteholder consents to the proposed indenture amendments, as the consent solicitation portion of the related tender offer for the notes expired as scheduled at 5 p.m. ET on July 23, without extension. Consents received by that deadline could no longer be revoked.

On July 31, Mothers Work was heard by high yield syndicate sources to have sold $125 million of new 11¼% senior notes due 2010; that bond sale followed the company's successful pricing on July 30 of 1.1 million new shares of common stock at $27 per share. A portion of the proceeds from the stock and bond sale was slated to be used to fund the tender offer for the 12 5/8% notes.

Credit Suisse First Boston (call toll free at 800 820-1653 or collect at 212 538-8474) in addition to lead-managing the new note sale, was the dealer manager and solicitation agent for the tender offer and the consent solicitation. The information agent was MacKenzie Partners, Inc. (call toll-free at 800 322-2885 or collect at 212 929-5500).

Service Corp. in exchange offer for 6% ' 05 notes

Service Corporation International (B1/BB-) said on Wednesday (Aug. 7) that it would offer to exchange up to $300 million of newly issued 7.70% senior notes due 2009 for an equivalent principal amount of its existing 6% senior notes due 2005. The exchange would take place as a private placement transaction, and will expire at 5 p.m. ET, on Sept. 5. Service Corp., a Houston-based international funeral home and cemetery operator, is offering the new notes on a 1-to-1 exchange basis with the existing notes, and in addition is offering to pay $27.50 in cash per $1,000 principal amount of existing notes validly tendered to the company by 5 p.m. ET on Aug. 23 and accepted for payment. Service Corp. will also pay accrued interest, in cash, up to the settlement date on all existing notes which have been tendered and accepted. It said that if more than $300 million of the existing notes are validly tendered under the offer and not withdrawn, the company will accept tenders from noteholders on a pro- rata basis. The exchange offer will be subject to customary conditions.

Coral Group tenders for 10% and 13.5% '09 notes

Coral Group Ltd. (B3/B+) said on Wednesday (Aug. 7) that it had begun a tender offer for its outstanding 10% senior subordinated notes due 2009 and its outstanding 13.5% subordinated PIK (payment-in-kind) notes due 2009, as well as a related solicitation of noteholder consents to proposed indenture changes. The Barking, Essex (U.K.)-based betting-parlor operator, formerly known as Coral Group plc, said the tender offer would expire at 5 p.m., London time, on Sept. 5, and set the consent payment deadline for 10 p.m., London time, on Aug. 20, with both deadline subject to possible extension. It said total consideration for the 10% notes would be based on a fixed spread of 50 basis points over the yield of the 5% U.K. Treasury Notes due June 7, 2004, while the total consideration for the 13.5% notes will be calculated using a fixed spread of 75 basis points over the yield of the same 5% notes, based on the assumption that all interest payments through the last scheduled interest payment date prior to the call date will be made in additional subordinated PIK notes. The two series of notes will be priced to their respective first-call dates in accordance with customary market practice.

Total consideration for each note series will include consent payment of £30 per £1,000 principal amount of notes tendered for those notes tendered by the aforementioned consent payment deadline; holders of notes tendered after the consent payment deadline but prior to the offer's expiration deadline and accepted for payment will receive the appropriate total consideration, minus the consent payment. Coral Group will set the price it will pay for each note series two business days prior to the expiration date (tentatively, Sept. 3, subject to possible extension) and settlement is expected to occur promptly following the expiration date. Coral Group said that consummation of the tender offer, and payment for tendered notes, is subject to the satisfaction or waiver of various conditions, including the condition that there be validly tendered and not validly withdrawn at least a majority of the outstanding aggregate principal amount of each series of notes and the completion of the acquisition. The conditions are more fully described in the official Offer to Purchase for Cash and Solicitation of Consents to Amendments, dated Aug. 7.

Lehman Brothers (contact Scott Macklin collect at 212 528-7581 or toll-free at 800 438-3242) is the sole dealer-manager and solicitation agent for the tender offer and consent solicitation. Deutsche Bank AG London and D.F. King & Co., Inc. (banks and brokers call collect at 212 269-5550; all others call toll-free at 800 949-2583) are the principal tender agent and information agent, respectively.

Doe Run extends and amends exchange, cash tender offer

The Doe Run Resources Corp. (Ca/D) said on Wednesday (Aug. 7) that it had extended its previously announced offers to exchange new notes plus a cash accrued interest payment for its outstanding 11¼% series B senior secured notes due 2005, its outstanding 11¼% series B senior notes due 2005 (C/D) and its outstanding series B floating interest rate notes due 2003, its previously announced concurrent cash tender off for those three series of notes and the previously announced related solicitation of noteholder consents to proposed changes in the indentures governing those notes. Those offers were extended to 5 p.m. ET on Aug. 14 from the previous Aug. 6 deadline. Doe Run also said that it was amending the minimum tender condition with respect to the floating-rate notes, reducing it to 86% from 90% previously. The minimum tender conditions for the other two series of notes - which had previously been achieved-remains 90%. With the amendment regarding the floating-rate notes, Doe Run the minimum tender required for the consummation of the offers has now been achieved.

AS PREVIOUSLY ANNOUNCED: On April 15, The Doe Run Resources Corp, a St. Louis-based metals smelting company, announced that it had reached an agreement in principle with its corporate parent, New York-based industrial conglomerate The Renco Group, Inc. and with Regiment Capital Advisors, LLC, under which Renco and Regiment would provide Doe Run with significant capital that would enable Doe Run to restructure its existing debt. Under that agreement in principle, Renco said it would purchase $20 million of Doe Run preferred stock and Regiment - already a significant holder of Doe Run's 11¼% senior and senior secured notes and its floating interest rate notes - said it would commit to lend Doe Run $35 million, and would offer other holders of Doe Run notes the opportunity to participate in making such loan. Doe Run said it planned to make a cash tender offer for a portion of its notes, and an exchange offer for the balance of the notes. The $55 million in proceeds of the Renco investment and the Regiment loan would be used to finance the cash tender offer, to pay the accrued interest as of March 15 on the notes that would be exchanged in the exchange offer, and to pay certain costs of those transactions. Doe Run said that if they were successful, the cash tender offer and the exchange offer would significantly reduce its outstanding debt. Doe Run would meanwhile be able to continue to operate all its facilities at present levels and Doe Run's trade creditors would not be adversely affected. Besides the $20 million investment, Renco would also provide Doe Run with credit support of up to $10 million, if necessary, to provide additional working capital. Doe Run said the non-binding agreement in principle would be subject to agreement on the terms of definitive documentation and further said that the successful completion of the planned transactions would be subject to several conditions, including, among others, the participation by holders of 90% of the principal amount of each class of notes in the cash tender offer and/or the exchange offer (Doe Run originally issued $200 million of the 11¼% senior notes, $50 million of the 11¼% senior secured notes and $55 million of the floating rate notes). It would also be conditioned upon the satisfactory modification of Doe Run's U.S. and Peruvian revolving credit facilities. Doe Run said it anticipates the completion of definitive documentation for the Regiment loan and the Renco investment within 30 days of its press release, at which time more detailed terms would be announced and the cash tender offer and exchange offer would be commenced.

On May 16, Doe Run outlined the terms of the agreement in principal and announced its tender offer and exchange offer for the notes in an 8-K filing with the Securities and Exchange Commission. The company did not initially disclose expiration deadlines for either offer nor did it disclose deadlines for the related consent solicitations. Doe Run said that under the terms of its exchange offer, it would offer the holders of its outstanding 11¼% senior secured notes $770 per $1,000 principal amount of the notes in new Doe Run 11¼% exchange notes due 2007, plus a cash payment of $56.25 per $1,000 principal amount equal to the amount of accrued and unpaid interest through March 15. It would offer the holders of its existing 11¼% senior notes $670 per $1,000 principal amount of the notes in new exchange notes, plus the $56.25 per $1,000 principal amount interest payment, and it would offer the holders of the existing floating-rate notes $670 per $1,000 principal amount of the notes in new exchange notes, plus an accrued interest payment of $46.90 per $1,000 principal amount. Doe Run said the exchange offer would be open only to those holders who could reasonably be defined as Accredited Investors under Rule 501(a) of the Securities Act of 1933. Doe Run said that simultaneously with the exchange offer, it would begin a cash tender offer for the outstanding notes, under which it would offer to buy the notes at a price between $250 and $350 per $1,000 principal amount. Doe Run said that it would select as the cash payment the highest price specified by any noteholder that would enable the company to purchase the maximum amount of notes while not exceeding its target aggregate purchase price of $44 million. Doe Run said it would pay the same cash payment for all of the notes validly tendered at or below that cash payment price and not subsequently withdrawn, upon the closing of the transaction. It said that holders whose notes were accepted for purchase under the cash tender offer would not be eligible to receive any interest payment on them above the cash payment price. Any holder tendering notes under the cash tender offer would also be considered to have tendered them under the exchange offer as well. Should the amount of notes tendered under the cash tender offer and not subsequently withdrawn exceed the amount that the company would be able to buy and still stay within its available cash aggregate purchase price of $44 million, Doe Run would first accept for payment all notes tendered below that cash payment price and would then accept notes tendered at the cash payment price on a pro-rata basis. Any notes thus tendered under the cash tender offer which could not be purchased for cash would then be exchanged for the appropriate amount of new exchange notes and the appropriate cash interest payment. Doe Run said that should a holder choose to neither tender his existing notes under the exchange offer nor the cash tender offer, it reserves the right to leave such unexchanged or unpurchased notes outstanding upon the conclusion of its offers; it also, however, reserves the right (but is under no obligation) to subsequently purchase such notes as permitted under the terms of its new senior credit facility either on the open market or in negotiated transactions, either for similar or for different consideration as it is offering under the exchange offer and the cash tender offer. It also reserves the right to defease the remaining outstanding notes or to redeem them under the terms of their indentures. Any remaining outstanding notes will be subject to indenture changes for which Doe Run is seeking noteholder consent concurrently with its exchange and cash tender offers. Doe Run said the tender of notes under either the exchange offer or the cash tender offer would be considered to constitute noteholder consent to the proposed indenture amendments, which would eliminate substantially all of the restrictive operating and financial covenants in the indentures, and which would modify a number of the "event of default" provisions, and various other provisions currently contained in the existing notes' indentures.

Doe Run also said that in connection with the offers, it would enter into a new $37.5 million, four-year senior secured credit facility with Regiment Capital Advisors, and that it would offer noteholders who initially elect to participate in the exchange offer the opportunity to participate as co-lenders under the New Senior Credit Facility on a pro-rata basis, based upon those noteholders' respective interests in the existing notes initially tendered in the exchange offer. The participation of the noteholders as co-lenders will be subject to Regiment's right, in its sole and absolute discretion, to lend at least 60% of the aggregate principal amount of the Initial Senior Loan. Each noteholder who elects to participate in the Initial

Senior Loan will also participate as a co-lender in any subsequent senior loan approved by Doe Run's existing lenders on a pro- rata basis, in accordance with such noteholder's percentage interest in the Initial Senior Loan. The proceeds of the Initial Senior Loan will be used to consummate the exchange offer and the cash tender offer. Noteholders choosing to participate in the Initial Senior Loan will receive warrants exercisable for up to 20% of the fully diluted common stock of Doe Run, at an initial total exercise price of $2,000,000. The warrants would be distributed to the participating noteholders on a pro-rata basis in accordance with such participant's interest in the Initial Senior Loan. Doe Run said that consummation of the cash tender offer and the exchange offer, as well as related transactions, would be conditioned upon a number of conditions including - but not limited to - the valid tender (without subsequent withdrawal) of at least $125,000,000 total principal amount of the existing notes under the cash tender offer; the participation by 90% of the outstanding principal amount of each of the three series of existing notes in the exchange offer and/or the cash tender offer; and the receipt of the requisite consents to the proposed indenture changes. Doe Run said it expected to launch the tender offer and exchange offer by the last week of May, and warned that there could be no assurance that it would be able to successfully complete the transactions described.

On June 6, Doe Run said in an SEC filing that it had begun an offer to exchange new notes plus a cash accrued interest payment for its outstanding 11¼% senior and senior secured notes due 2005, and its outstanding floating interest rate notes due 2003; had begun a concurrent cash tender off for those three series of notes; and had begun a related solicitation of noteholder consents to proposed changes in the indentures governing those notes. Doe Run said it was also offering noteholders choosing to participate in the exchange offer the option of also participating in its new senior credit facility as co-lenders. It outlined terms of the offers that were the same as those which Doe Run had already outlined in a previous SEC filing. In its latest filing, the company also said that the exchange offer, the cash tender offer and the right of participation in the senior loan would each expire at 5 p.m. ET on July 9, subject to possible extension. Tendered notes could be withdrawn at any time prior to the expiration date.

On July 9, Doe Run extended the pending exchange offer, the cash tender offer and the consent solicitation to 5 p.m. ET on July 19, and said that it was providing updated projected financial information. The company further reported that it had been engaged in "constructive discussions" with holders of a "significant amount" of its notes, and said it was extending the expiration time of the offers and providing the updated projected financial information "as an aid to further discussion of the Offers."

On July 19, Doe Run said that it had further extended its exchange offer for its 11¼% senior and senior secured notes due 2005 and its Series B floating interest rate notes due 2003, its concurrent cash tender off for those three series of notes and solicitation of noteholder consents to 5 p.m. ET on Aug. 2, subject to possible further extension, from the previous July 19 deadline. The company also amended the terms of the aforementioned offers to - among other things - allow its noteholders the ability to elect to participate in a third offer, "the Exchange/Loan Offer," in addition to participating in the previously described cash tender offer or exchange offer. It said that holders who participate in this "Exchange/Loan Offer" will be able to exchange their notes for a participation interest in the Initial Senior Loan which the company, as previously announced, is entering into as part of its overall recapitalization. Doe Run said that it was extending the expiration time of the offers to allow noteholders to consider participating in such an additional offer. Doe Run also said it was amending the terms of the exchange notes which noteholders could elect to receive as part of either the exchange offer or the newly announced "Exchange/Loan Offer" to include, among other things, the provision of a required 1% per annum cash interest payment on each of the first two interest payment dates (as opposed to the previously outlined provision contained in the "Description of Exchange Notes" found in the official Offering Memorandum, which indicated that such interest payments could be paid in full "in kind" (i.e., through the issuance of additional notes, with no cash component). Doe Run further announced that in addition to the inclusion of the new "Exchange/Loan Offer," it has amended the previously outlined terms of its "New Senior Credit Facility" (including the "Subsequent Senior Loan Participation") and its exchange notes to be issued to holders of its current notes successfully participating in the exchange offer. Doe Run said that as amended, the New Senior Credit Facility will consist of the "Initial Senior Loan" in the amount of $35.7 million and a Subsequent Senior Loan in the amount of $25 million, $10 million of which will be committed by Regiment Capital Advisors, LLC at closing to provide Doe Run with additional working capital under certain circumstances in the future. The balance of the Subsequent Senior Loan is to be funded at the request of Doe Run subject to the consent of the lenders. The Renco Group, Inc., ultimate parent of Doe Run, has agreed to take a participation interest in $5 million of the aforementioned $10 million "Regiment Credit Support." Holders of Doe Run's currently outstanding notes who participate in the Initial Senior Loan will have the option - but not the obligation - to participate in the Subsequent Senior Loan. Noteholders who have already tendered their notes into the cash tender offer or the exchange offer will have the right to withdraw or amend such tenders; noteholders who wish to tender their notes into the new "Exchange/Loan Offer" must transmit a completed Letter of Transmittal for such offer to the depositary and exchange agent for the offers.

On Aug. 2, Doe Run said that it had extended the exchange offer, the concurrent cash tender offer and the related consent solicitation to 5 p.m. ET on Aug. 6 from the previous Aug. 2 deadline. Doe Run also said that it has received "overwhelming support" for the offers from holders of all three categories of notes. Doe Run said that although, to the best of its knowledge, holders of approximately 95% of Doe Run's aggregate principal amount of notes outstanding had chosen to participate in the offers, as of the old deadline, approximately 86% of the floating rate notes had been tendered for participation in the offers, still less than the 90% minimum tender required for consummation of the offers; therefore, the company said it was extending the expiration time of the offers in order to continue discussions with John Hancock Funds, Triton Partners LLC and Hawkeye Capital, LP concerning the participation by those entities with respect to the floating-rate notes which those companies hold. Doe Run cautioned that there could be "no assurance that [it] will be able to consummate the Offers successfully."

State Street Bank and Trust Co. in Boston (call 617 662-1548 or fax documents to 617 662-1452) is the exchange agent and the depositary for the offers. MacKenzie Partners, Inc. (call 212 929-5500 or, toll-free, 800 322-2885) is the information agent.

Acterna again extends 9 ¾% '08 note tender offers

Acterna Corp. (Caa3/B) said on Tuesday (Aug. 6) that it had again extended the expiration date of the previously announced cash tender offers for up to $155 million (on a combined basis) of its outstanding 9¾% percent senior subordinated notes due 2008, which were mounted by the company itself and by a company affiliate. Those offers, which were to have expired at midnight ET on Aug. 5, have been extended to expire at 5 p.m. ET on Aug. 12, subject to possible further extension. As of the close of business on Aug. 5, some $153.32 million principal amount of the notes had been validly tendered representing an aggregate purchase price under the terms of the tender offers of approximately $33.7 million. This represents an increase over the $89.014 million of notes, representing an aggregate purchase price of approximately $19.6 million, which had been tendered by the previous deadline of July 22.

AS PREVIOUSLY ANNOUNCED, Acterna, a Germantown, Md.-based - communications test and management company, said on June 24 that along with its affiliate, it had begun cash tender offers for a total of up to $155 million of its outstanding 9¾% senior subordinated notes due 2008, which had been issued by its Acterna LLC subsidiary. The consideration for any notes tendered and accepted for payment under either of the tender offers will be $220 per $1,000 principal amount of notes tendered. Acterna, said the tender offers are not conditioned on the tender of any minimum principal amount of notes being tendered by their holders. Acterna said that the tender offers were being made by Acterna itself through its Acterna LLC subsidiary, and by its CD&R VI (Barbados), Ltd. affiliate, and would expire at midnight ET on July 22 (the deadline was subsequently extended). Payment for validly tendered notes not subsequently withdrawn will be made promptly following expiration of the offers. Acterna's own offer is for $109 million of the notes, while CD&R Barbados' offer is for $46 million of the notes, and is subject to a number of conditions set forth in the official Offers to Purchase, document, including the purchase by Acterna of the first $63 million of the notes which are tendered. Acterna's offer is subject to a number of conditions, including obtaining from its senior secured credit facility lenders consent to amend or waive certain provisions of that credit agreement. Acterna cautioned that it could offer no firm assurance that the consent sought by the company would be obtained on the terms sought on or before the expiration date of the tender offers, if at all. In connection with its offer, CD&R Barbados expects to agree with Acterna's senior secured credit agreement lenders to invest all cash interest received (on an after-tax basis), on the notes it purchases in the tender offer or otherwise which it will otherwise hold in new Acterna senior secured convertible notes.

Acterna said on July 15 that its senior secured credit facility lender group will permit the company to use $24 million to purchase a portion of the 9 ¾% notes. Acterna further announced that it had reached agreement with the lender group on an amendment to its credit agreement, with the lenders, among other things, to approve the sale of Acterna's Airshow business to Rockwell Collins and to consent to a change to certain financial covenants in the credit agreement upon consummation of the Airshow sale. Acterna said the amendment clears the way for the company to proceed with the tender offer for the bonds, and said the revised financial covenants would provide additional financial flexibility as the company works through "difficult industry conditions."

On July 23, Acterna said that it had extended the expiration date of the tender offers to midnight, ET on Aug. 5, subject to possible further extension, from the original deadline of midnight ET on July 22. At the close of business on July 22, some $89.014 million principal amount of the notes had been validly tendered, representing an aggregate purchase price under the terms of the tender offer of approximately $19.6 million. Dresdner Kleinwort Wasserstein, Inc. (call Marc D. Puntus at 212 895-1819) is acting as the exclusive Dealer Manager. MacKenzie Partners, Inc. (call 800 322-2885) is the information agent.

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