Dana sets pricing in tender for notes

New York, Dec. 8 - Dana Corp. said it has set the pricing in its tender offer and consent solicitation for its outstanding 10 1/8% notes due 2010 and dollar- and euro-denominated 9% notes due 2011.

The company will pay $1,128.58 per $1,000 principal amount for the 10 1/8% notes, including a $50 early tender payment. As of 5 p.m. ET on Nov. 29, holders had tendered $169.502 million of the $250 million outstanding.

Dana will pay €1,269.64 per €1,000 principal amount for the 9% euro notes, including a €50 early tender payment. As of 5 p.m. ET on Dec. 3, holders had tendered €163.658 million of the €200 million outstanding.

And it will pay $1,230.37 per $1,000 principal amount for the 9% dollar notes, including a $50 early tender payment. As of 5 p.m. ET on Nov. 29, holders had tendered $445.43 million of the $575 million outstanding.

On Dec. 6 Dana said that the early tender deadlines for its tender offer and consent solicitation for its outstanding 10 1/8% notes due 2010 and dollar- and euro-denominated 9% notes due 2011 had expired and that as of 5 p.m. ET on Dec. 3, holders of $835 million (or its equivalent) total principal amount of the notes had tendered them under the terms of the offer. The amount tendered represents 76% of the notes covered by the offer.

Dana has received the required consents to adopt its proposed amendments to the indenture of each of the three series of notes.

The tender offer expires on Dec. 22.

As previously announced, Dana, a Toledo, Ohio-based automotive systems maker said on Nov. 15 that it had begun a cash tender offer for up to $635 million (or equivalent) of its outstanding 10 1/8% notes and its outstanding dollar- and euro-denominated 9% notes (an amount subsequently raised) and was also soliciting noteholder consents to changes in the notes' respective indentures to eliminate substantially all of the restrictive covenants, certain events of default and related provisions.

Dana initially set an early tender deadline of 5 p.m. ET on Nov. 29, said that consideration to be paid for the notes would be fixed 10 business days before the expiration, and that the offer would expire at 5 p.m. ET on Dec. 22, subject to possible extension (the early tender date for the euro-denominated notes was later extended). Settlement is expected to be on Dec. 23.

Dana initially said that it would accept notes for purchase according to a priority ranking, with all notes tendered from a higher priority group to be accepted before any notes from a lower group, but subsequently dropped such language from the offer.

Initially, it said that top priority would go to the company's $250 million of outstanding 10 1/8% notes. Consideration for the notes would be determined using formula based on an 85 basis point fixed spread over the reference security, the 1 5/8% U.S. Treasury note due 2006.

It said second priority would go to its €200 million of outstanding 9% euro-denominated notes, and third priority to its $575 million of 9% dollar-denominated notes. It initially said that consideration for both would be based on a 110 basis point fixed spread over the 5% U.S. Treasury note due 2011, but subsequently designated a different reference security for the euro notes.

Holders of all three categories of notes tendering them by the early tender deadline and thus delivering consents to the proposed indenture changes would receive total consideration that includes a consent payment of $50 per $1,000 principal amount or €50 per €1,000 principal amount; holders tendering after the early tender deadline would not receive the consent payment. All tendering holders will also receive accrued interest from the last interest payment date up to the settlement date.

Dana said that the proposed amendments to the notes' respective indentures that the holders are being asked to consent to will only become effective if Dana receives consents representing a majority of the outstanding principal amount of each issue of notes.

On Nov. 30, Dana announced it had amended certain terms of the offer and had extended the early tender deadline for the 9% euro-denominated notes to 5 p.m. ET on Dec. 3 from Nov. 29. All other deadlines under the offer were unchanged. It said that the consideration to be paid to holders tendering those notes would be calculated based on a fixed spread of 110 basis points over the 5% DBR security due July 4, 2011, rather than the 5% U.S. Treasury note due 2011.

Dana also increased the size of the tender offer to a total amount of $1.15 billion (or equivalent) from the originally announced $635 million (or equivalent) and said that thus, all notes properly tendered in the offer will be purchased, subject to the satisfaction of offer's conditions, and there will not be any pro ration. It said that as of 5 p.m. ET on Nov. 29, a total of about $672 million (or its equivalent) total principal amount of the three series of notes had been tendered, including a majority in principal amount of each of the 10 1/8% notes and 9% dollar-denominated notes, constituting the required consents sufficient to effect the proposed amendments to their respective indentures.

The company said that the settlement date for all notes tendered prior to the applicable early tender date for each series is expected to occur on or about Dec. 10, while the settlement date for any notes tendered after the applicable early tender date will be promptly after the offer expires. The source of funds for the offer will include proceeds of the sale of Dana's automotive aftermarket businesses and the proceeds from additional debt incurred by Dana. The tender offer has been amended to add a condition that Dana consummates a financing transaction of at least $450 million to fund the offer.

Banc of America Securities is the coordinator for the offer and consent solicitation and will be a joint lead dealer manager for the offer and solicitation agent (call 888 292-0070 or collect at 212 847-5834, or +44 20 7174-4737). Deutsche Bank Securities (call 866 627-0391 or collect at 212 250-2955 or +44 20 7545-8011) and J.P. Morgan Securities (call 866 834-4666, or collect at 212 834-3424, or +44 20 7742-7506) will also act as joint-lead dealer managers.

D.F. King & Co. Inc. and D.F. King (Europe) Ltd. are the information agents for the offer (800 859-8509 or call collect at 212 269-5550, or +44 20 7920-9720).

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