Crown Castle sets prices in tender for 10 3/8%, 11¼% notes

New York, Dec. 18 - Crown Castle International Corp. (B3/B-) said it has set the amounts it will pay in its tender offer for its 10 3/8% senior discount notes due 2011 and 11¼% senior discount notes due 2011.

The Houston communications antenna tower owner will pay $1,025.69 per $1,000 principal amount at maturity for the 10 3/8% notes with an additional $20 per $1,000 principal amount at maturity payable to holders who tendered before the consent date of Dec. 9.

It will pay $1,026.03 per $1,000 principal amount for the 11¼% notes with an additional $20 per $1,000 principal amount payable to holders who tendered before the consent date of Dec. 9.

The figure for the 10 3/8% notes was calculated by taking the present value of $1,051.87, which is the redemption price for the notes at their first call on May 15, 2004, using a yield of the yield to maturity of the 3¼% U.S. Treasury note due May 31, 2004 plus 50 basis points. To obtain the payment for holders who did not tender by the consent date, Crown Castle then subtracted $20 per $1,000 principal amount at maturity.

The figure for the11¼% notes was calculated by taking the present value of $1,056.25, which is the redemption price for the notes at their first call on Aug. 1, 2004, using a yield of the yield to maturity of the 7¼% U.S. Treasury note due Aug. 15, 2004 plus 50 basis points. To obtain the payment for holders who did not tender by the consent date, Crown Castle then subtracted $20 per $1,000 principal amount.

For both series of notes the assumed payment date is Dec. 24.

Crown Castle announced on Dec. 10 that it had received the necessary noteholder consents to proposed indenture changes for the two series of notes by the consent solicitation deadline of 5 p.m. ET on Dec. 9.

As of the consent deadline, $424.3 million of the 10 3/8% notes, or 94.5% of the outstanding principal amount at maturity, had been tendered, along with $190.4 million of the 11¼% notes, or 93.7% of the principal amount.

The underlying tender offer for the notes is scheduled to expire on Dec. 23.

Crown Castle said on Nov. 17 that it would sell $300 million of senior notes due 2014 and use the proceeds together with existing cash balances to tender in the near term for its outstanding 10 3/8% and 11¼% notes. High yield syndicate sources said that later in that session the company sold $300 million principal amount of new 7½% senior notes due 2013 at 96.603.

In its most recent 10-Q quarterly filing, the company reported that as of Sept. 30, it had $390.905 million of the 10 3/8% notes outstanding, net of discount, and had $170.777 million of the 11¼% notes outstanding, net of discount.

The company said the pricing date for the two offers would be on the third business day before the expiration.

Crown Castle initially said that it would set the consideration it would pay for the 10 3/8% notes using a formula based on the redemption price on the first call date ($1,051.87 per $1,000 principal amount), using a 100-basis point spread over the yield on the pricing date of the reference security, the 3¼% Treasury note due May 31, 2004, and said that it would set the consideration it would pay for the 11¼% notes based on the redemption price on the first call date ($1,056.25 per $1,000 principal amount), using a 100 basis-point spread over the yield on the pricing date of the 7¼% Treasury note due Aug. 15, 2004.

On Dec. 4, Crown Castle said it was increasing the redemption prices on the two series of notes, saying the fixed spread over the respective reference security yields would now be 50 basis points, rather than the originally announced 100 bps. It said the increase would apply to any notes previously tendered as well as any to be subsequently tendered.

The total consideration for both series of notes will include a consent payment of $20 per $1,000 principal amount at maturity for those holders tendering by the now-expired consent deadline and thus giving consent to indenture changes aimed at eliminating substantially all of the restrictive covenants and certain events of default under the notes' respective indentures, and making certain other amendments to the indentures. The company said holders could not tender their notes without delivering a consent and could not deliver a consent without tendering their notes. Holders tendering after the consent deadline will not receive the consent payment as part of their consideration.

The company said that the closing of each tender offer would be subject to certain conditions, including the now fulfilled conditions of the closing by the Crown Castle of its previously announced offering of 7½% senior notes due 2013, which took place on Dec. 2, and the receipt of the required consents from holders of the existing notes to amend the notes' Indentures.

Crown Castle meantime is continuing to run its completely separate tender offer and consent solicitation for all of its outstanding 9% senior notes due 2011 and 9½% senior notes due 2011, which is scheduled to expire on Jan. 6.

J.P. Morgan Securities Inc. is the dealer-manager and solicitation agent (contact Brian Tramontozzi at 212 270-9153). MacKenzie Partners, Inc. is the information agent (contact Steve Balet at 800 322-2885 or collect at 212 929-5500).

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