Satelites Mexicanos plans 10 1/8% '04 notes consent solicitation

Satelites Mexicanos, SA de CV said Friday (Nov. 1) that it plans to launch a consent solicitation on Monday (Nov. 4) seeking the consent of the holders of a majority of its 10 1/8% senior notes due 2004 to a proposed change in the notes' indenture. The Mexico City-based satellite broadcasting and telecommunications operator - popularly known as Satmex- wants to amend the insurance covenant contained in the indenture governing the notes so that it will make the insurance requirements under that indenture conform to insurance coverage currently available on commercially reasonable terms in the space insurance market.

Satmex said that concurrently with the consent solicitation, it intends to launch a solicitation seeking a waiver from the majority of the holders of its senior secured floating-rate notes due 2004 of the covenant in the indenture governing the floating-rate notes that currently restricts Satmex's ability to amend the insurance covenant in the 10 1/8% notes' indenture. As a condition to the amendment, Satmex will also need to obtain a waiver from the majority of the lenders under its revolving credit facility.

The company expressed confidence that it will receive the requisite consents.

It gave no further information about the planned consent and waiver solicitation ahead of the formal announcement of the consent bid on Monday.

Pennzoil-Quaker State completes three bond tender offers, terminates fourth

Pennzoil-Quaker State Co. said on Thursday (Oct. 31) that it had successfully completed its previously announced offers to purchase all of its outstanding $100 million of 6 5/8% notes due 2005; its $200 million of 6¾% notes due 2009 and its $400 million of 7 3/8% debentures due 2029. The tender offers for the notes and the related solicitation of noteholder consents to proposed indenture changes expired as scheduled at midnight ET on Oct. 30 with no extension. The company said that as of that deadline noteholders had tendered 93.5% of the 6 5/8% notes, 98.8% of the 6¾% notes, and 99.7% of the 7 3/8% debentures. Pennzoil-Quaker State said that it had accepted all of the notes which were validly tendered for purchase, with settlement expected to occur on Friday (Nov. 1). It also noted that it had received the requisite consents to the proposed changes in the notes' indentures by the now-passed Oct. 16 consent deadline and that therefore the amendments covering any of the notes which remain outstanding are now operative.

Pennzoil further said that it had also completed its previously announced change-of-control offer for its $250 million of outstanding 10% Series B senior notes due 2008, and that no 10% notes were tendered under that offer. As of Oct. 31, the company's previously announced tender offer for the 10% notes and the previously announced 10% note alternative offer remained open, both scheduled to expire at midnight that evening, subject to possible further extension.

On Friday (Nov. 1) Pennzoil said that it had terminated the 10% note tender offer and the 10% note alternative offer and the related consent solicitation, as less than 90% of the notes had been validly tendered under the tender offer by the expiration deadline (midnight ET on Oct. 31), thus failing to meet the previously amended minimum tender condition. The company said that it is therefore not required to purchase any 10% notes tendered under the offer and it will not purchase such notes; any 10% notes which had been tendered under the note tender offer will be returned promptly to their holders. It further said that none of the notes had been tendered under the 10% note alternative offer as of its expiration date.

Pennzoil further said that - as indicated in the original Offer to Purchase - its corporate parent, Shell Oil Co., will be purchasing shares of Pennzoil's capital stock, with the proceeds of that sale to be used by Pennzoil to redeem 35% of its outstanding 10% notes at a redemption price of 110% of the principal amount (i.e. $1,100 per $1,000 principal amount). Pennzoil will pay accrued and unpaid interest up to but not including, the planned redemption date of Dec. 2.

Merrill Lynch & Co. was the exclusive Dealer Manager for the offers and the consent solicitations (call toll-free at 888 ML4-TNDR, or at 212 449-4914). Mellon Investor Services LLC was the information agent (call 888 585-5314; bankers and brokers call collect at 917 320-6286).

AS PREVIOUSLY ANNOUNCED, Pennzoil-Quaker State, a Houston-based petroleum products producer which became a wholly owned subsidiary of Shell Oil Co. (the U.S. arm of international energy giant Royal Dutch Shell Group) on Oct. 1, said on Oct. 2 that it had begun tender offers for the debt, as well as related solicitation of noteholder consents to certain amendments to each of the notes' respective indentures. Pennzoil said that in addition to the tender offer for its 10% notes, it was providing two additional offers for the holders of those notes, but it said that 10% noteholders could tender their securities under only one of the three offers.

Pennzoil-Quaker State initially said each of the tender offers as well as the alternative offer and the change-of-control offer for the 10% notes would expire at midnight ET on Oct. 30 (the expiration date on all three of the 10% note offers was subsequently extended to Oct. 31, while the deadline on the other three note offers remained Oct. 30). It set 5 p.m. ET on Oct. 16 as the consent deadline for each of the offers, by which time notes must have been tendered in order to receive the applicable consent payment as part of the total consideration. All deadlines are subject to possible extension.

Pennzoil said it would set the total purchase price which it will pay for the notes via a formula based upon a fixed spread over the yield to maturity of the respective reference security for each of the note series being tendered for at 2 p.m. ET on the second business day before the expiration of the tender offers (the notes were actually priced on that date, Oct. 28). Pennzoil said it would determine the price it will pay for the 6 5/8% notes based on a 30-basis point fixed spread over the yield of the 5 7/8% U.S. Treasury Note due Nov. 15, 2005. It would determine the price for the 6¾% notes based on a 35-basis point fixed spread over the yield of the 5½% U.S. Treasury Note due May 15, 2009. It would determine the price for the 7 3/8% debentures based on a 55-basis point fixed spread over the yield of the 5 3/8% U.S. Treasury Note due Feb. 15, 2031. And it would determine the price for the 10% notes based on a 30-basis point fixed spread over the yield on the 5 7/8% U.S. Treasury Note due Nov. 15, 2005. For the 10% notes only, the price would be determined based on the sum of (x) 35% of the equity offering redemption price (equal to 110% of the principal amount of 10% notes validly tendered, and (y) 65% of the fixed spread price for the 10% notes. The total purchase price for each series of notes would include a consent payment of 3% (i.e. $30 per $1,000 principal amount of notes tendered), which will be paid only to holders who have tendered their notes by the consent deadline; holders tendering after that deadline will receive the total purchase price minus the consent payment. Pennzoil will also pay accrued and unpaid interest on validly tendered and accepted notes up to - but not including - the settlement date, which is expected to be two business days after the expiration date (tentatively, the settlement date will be Friday, Nov. 1).

Concurrently with each tender offer, Pennzoil is soliciting noteholders' consents to certain amendments to the notes' indenture that will eliminate most of the applicable restrictive covenants. For each series of notes, adoption of the amendments requires the consent of holders of not less than a majority in outstanding principal amount of that series of notes. In the case of the 6 5/8% ONLY, a holder cannot deliver a consent, and therefore cannot tender such 6 5/8% notes unless it either was the registered owner of such 6 5/8% notes as of the close of business on Oct. 1, or unless it obtains a proxy from the registered owner as of that record date. Each tender offer and consent solicitation is conditioned upon, among other things, the receipt of the consent of holders of not less than a majority in outstanding principal amount for the applicable series of notes.

In addition to the tender offer, Pennzoil is offering to purchase for cash any and all of the 10% notes at a price equal to 101% of their par value ($1,010 per $1,000 of the principal amount of 10% notes validly tendered) as a change-of-control offer, as stipulated by the notes' indenture. That change-of-control offer was triggered by the acquisition of Pennzoil by Shell. Consummation of the 10% note change-of-control offer is unconditional.

Pennzoil is also making an alternative offer to the holders of the 10% notes, under which it is offering to purchase for cash any and all of the 10% notes on the 10% note tender offer terms, as outlined above IF the conditions precedent to the completion of the 10% note tender offer ARE satisfied when the offer expires. It said that IF such conditions ARE NOT satisfied at such time, 10% notes tendered pursuant to the 10% note alternative offer will be purchased at the 10% note change-of-control purchase price. Consummation of the 10% note alternative offer is unconditional.

Cede & Co., the nominee of The Depository Trust Co., is the registered holder of all the notes subject to the offers. Beneficial holders wishing to tender their notes must instruct the participant in DTC through which they hold such notes to tender such notes on their behalf.

On Oct. 17, Pennzoil-Quaker State said that it was extending the expiration deadline on the 10% notes tender offer, the change of control offer for the 10% notes and the alternative offer for the 10% notes to 5 p.m. ET on Oct. 31, subject to possible further extension, from the previous Oct. 30 deadline. The deadline for the other three note offers remains Oct. 30, subject to possible extension.

The company also said that Pennzoil said its 10% note tender offer and the 10% note alternative offer were amended and now are conditioned on the valid tender and delivery of consents to 90% of those notes.

On Oct. 28, Pennzoil-Quaker State Co. announced that it had set the total purchase prices for its tender offers, setting the total purchase price for the 6 5/8% notes at $1,112.36 per $1,000 principal amount of notes validly tendered and accepted for purchase; setting the total purchase price for the 6 ¾% notes at $1,160.99 per $1,000 principal amount; setting the total purchase price for the 7 3/8% debentures at $1,231.02 per $1,000 principal amount. It said that price would include, where applicable, the $30 per $1,000 principal amount consent fee for those notes tendered by the now-passed consent deadline, and that notes tendered after the consent deadline would be purchased for the total purchase price minus the consent payment.

The company also set the total purchase price for the 10% notes under the change-of-control offer at $1,010 per $1,000 principal amount. Pennzoil did not announce a total purchase price for the 10% notes under its tender offer or the previously outlined alternative offer for the 10% notes.

The company also said that in addition to the respective total purchase prices for the various notes, it would pay accrued and unpaid interest up to, but not including, the applicable settlement date, which is expected to be Friday (Nov. 1).

On Oct. 30, announced the total purchase price for the 10% notes under its tender offer and the alternative offer for the notes, based upon the yield of the previously announced reference security as of 2 p.m. ET on Oct. 29, two business days before the scheduled expiration deadline. It said that the total purchase price for validly tendered 10% notes accepted for purchase would be $1,204.02 per $1,000 principal amount of notes tendered and accepted for purchase. The total purchase price would include the $30 per $1,000 principal amount consent payment where applicable, with notes tendered after the now-passed consent deadline to be purchased for the total purchase price minus the consent payment (i.e., $1,174.02 per $1,000 principal amount). In addition to the purchase price, the company would also pay accrued and unpaid interest up to, but not including, the expected settlement date of Monday (Nov. 4).

Pioneer Natural Resources redeemed 9 5/8% '10 notes in third quarter

Pioneer Natural Resources (Ba1) said in its third-quarter filing with the Securities and Exchange Commission on Thursday (Oct. 31) that during the three-month period ended Sept. 30, it had repurchased $27.1 million of its 9 5/8% percent senior notes due 2010 and had repurchased a total of $47.1 million of the notes in the nine-month period ended Sept. 30. Pioneer recognized losses of, respectively, $3.9 million and $6.7 million, which are classified as extraordinary items in the company's consolidated statements of operations for the three and nine month periods ended Sept. 30.

Pioneer also said that in July, it had repaid a $45.2 million capital cost obligation in connection with the acquisition of West Panhandle field assets, and had recognized a third-quarter extraordinary loss, net of associated taxes, of $15.6 million in connection with the transaction.

AS PREVIOUSLY ANNOUNCED, Pioneer, an Irving, Tex.-based energy exploration and production company, said on March 7 that it had redeemed $38.7 million of its 9 5/8% senior notes due 2010 during the 2001 fourth quarter. The company had originally issued $425 million of the notes in April, 2000. It said the redemption of the notes followed redemptions in July, 2001 of its $22.5 million remaining outstanding 11 5/8% senior subordinated discount notes due 2006, as well as $6.8 million of its 10 5/8% senior subordinated notes also due 2006. Pioneer further said that thanks to the 2001 note redemptions and a decrease in its weighted average borrowing rate, interest expense in 2001 declined to $123 million from $162 million in 2000.

Lexington Precision extends exchange offer for 12 ¾% notes

Lexington Precision Corp. said on Friday (Nov. 1) that it had again extended its previously announced offer to exchange new debt, plus stock-purchase warrants and a participation payment, for its outstanding 12¾% senior subordinated notes which came due in 2000 but which were not redeemed at that time. The offer was extended to midnight ET on Nov. 15, subject to possible further extension, from the previous Oct. 31 deadline.

Lexington said that as of Oct. 31, holders had tendered $27,209,125 of the notes, or slightly more than 99% of the outstanding amount, unchanged from the amount announced on Oct. 18. While that has satisfied the 99% minimum tender condition to the exchange offer, the company said that a number of other conditions have not yet been satisfied, including the completion of a new senior secured credit facility on terms satisfactory to the company.

AS PREVIOUSLY ANNOUNCED Lexington Precision, a New York-based manufacturer of rubber and metal components for the automobile and medical devices industries, said on July 10 that it had begun an exchange offer for its $27.412 million of outstanding 12 ¾% notes. Under the terms of the exchange, which is open only to holders of record (as of July 1) of the existing notes, the company would give them a principal amount of new 11½% senior subordinated notes due 2007 equal to the sum of the principal amount of the outstanding 12¾% notes, plus the accrued interest on those notes from Aug. 1 1999, through April 30 of this year. The company said that accrued interest would total $350.625 per $1,000 principal amount of the existing notes. If all of the outstanding existing notes were to be tendered and the exchange offer completed Lexington Precision would issue new 11½% notes to cover a total of $9.611 million of accrued interest from the existing notes.

Lexington Precision initially said that the exchange offer would expire at midnight ET on Aug. 7, although this deadline was subsequently extended. It said that interest on the new 11½% notes would accrue from May 1 of this year; interest for the three-month period ended July 31 would be paid on the issue date of the 11½% notes, and after that, would be payable quarterly on each November 1, February 1, May 1, and August 1. The company said that holders of the new 11½% notes would also receive a participation fee equal to $22.20 per $1,000 principal amount of 11½% notes issued, payable in three equal installments on Sept. 30, 2002, Dec. 31 and March 31, 2003. Lexington will also issue to the holders of the new notes warrants to purchase 10 shares of common stock per $1,000 principal amount of notes; the warrants would allow their holders to buy the stock at a price of $3.50 per share at any time during the period from Jan. 1, 2004 through Aug. 1, 2007. Prior to Jan. 1, 2004, the warrants will not be detachable from the 11½% notes and will be transferable only as part of a unit with the notes.

The company said that the exchange offer is being undertaken as part of a larger comprehensive financial restructuring plan that would also involve an extension of the company's 10 ½% senior notes and 14% junior subordinated notes, and a refinancing of the company's senior, secured credit facilities. It said that completion of the exchange offer would be subject to a number of conditions, including the refinancing of Lexington's other debt on satisfactory terms. Completion of the exchange offer would also be subject to the condition that at least 99% of the outstanding 12¾% notes be tendered for exchange and not withdrawn. The company warned that if the exchange offer is completed, it does not presently intend to pay principal or accrued interest on any untendered 12¾% notes. It further said that the exchange offer reflects an agreement in principle that it reached with the four largest holders of its 12 ¾% notes, who among them control a total of $20.49 million of the 12¾% notes, or 74.7% of the $27.412 million outstanding.

On Aug. 7, the company extended the expiration of the exchange offer to 12 midnight ET on Aug. 30, and on Aug. 30, it said that it had again extended the offer to midnight ET on Sept. 30 and said that it had received tenders of $27,131,875 of the notes, or 98.98% of the outstanding amount, just shy of the 99% minimum tender condition. On Sept. 30, Lexington announced the further extension of the offer to 12 midnight ET on Oct. 18, and said that it had received tenders of $27,208,875 of the notes, or slightly more than 99% of the outstanding amount, satisfying the minimum tender condition to the consummation of the exchange offer. On Oct. 18, the company announced the further extension of the offer to 12 midnight on Oct. 31, subject to possible further extension, and said that as of Oct. 18, some $27,209,125 of the notes, or slightly more than 99% of the outstanding amount, had been tendered.

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