Viskase again extends exchange offer for 10¼% '01 notes

Viskase Cos. Inc. said on Monday (Oct. 21) that it was again extending the expiration date of its previously announced offer to exchange new debt and preferred shares for its outstanding 10¼% senior notes which came due on Dec. 1, 2001 (but which were not repaid at that time), under a previously announced restructuring agreement with an ad hoc committee representing the holders of a majority of the notes. The company said that the offer, which had been scheduled to expire on Oct. 18, would now expire at 5 p.m. ET on Nov. 4, subject to possible further extension.

Viskase said that to date so far, $141.265 million principal amount of the existing notes had been tendered, representing 86.6% of the principal amount outstanding (up from $136.649 million, or 83.8%, as of the original expiration deadline of Sept. 19). It also said that consents to the company's previously announced prepackaged plan of reorganization had been received from the holders of $115.436 million principal amount of the notes, or 70.8% of the amount outstanding (up from $112.948 million, or 69.3% previously).

Wells Fargo Bank Minnesota, National Association, is the exchange agent for the offer. Morrow & Co. Inc. (call 800 607-0088) is the information agent.

AS PREVIOUSLY ANNOUNCED, Viskase, a Willowbrook, Ill.-based maker of cellulose sausage casings and other food packaging materials, said on July 16 that it had executed a restructuring agreement with the ad hoc committee of holders of its 10¼% notes regarding the restructuring of those notes. Under the terms of the proposed restructuring, the company's wholly owned operating subsidiary, Viskase Corp. would be merged with and into Viskase Cos. Inc., which would be the surviving corporate entity. The outstanding senior notes would be exchanged for new 8% senior secured notes due 2008 and shares of Series A preferred stock, to be issued by the restructured company on a basis of $367.96271 principal amount of the new notes (i.e., a total of $60 million) and 126.82448 shares of preferred stock (i.e., a total of 20,680,000 shares or 94% of the preferred stock) for each $1,000 principal amount of the existing senior notes.

Viskase said that the $60 million of new notes would pay interest semi-annually (except annually with respect to year four and quarterly with respect to year five), with interest payable in principal amount of new notes (i.e. pay-in-kind) for the first three years. Interest for years four and five would be payable in cash to the extent of available cash flow, as defined, and the balance in principal amount of new notes. After that, the interest would be payable in cash. The new notes would be secured by a first lien on the assets of the company, post-merger, and would be subject to subordination of up to $25 million for a secured working capital credit facility for the company.

It also said that the new Series A preferred shares would pay a 6% cumulative dividend. Its holders would vote on an as-converted basis on all matters together with Viskase's common stockholders. The preferred shares would also have a liquidation preference of $5 per share and be convertible into common stock at any time at a price of 20 cents per share. Upon conversion, the preferred shares would represent about 97% of the common stock. Accrued but unpaid dividends, at time of conversion, would be convertible into common stock upon the same basis. At Viskase's option, the preferred shares would be automatically converted into common stock on the same basis in connection with a public offering of securities by the company of not less than $50 million. Preferred stock dividends would be payable in cash to the extent that Viskase is legally, contractually and financially able to pay dividends.

The proposed exchange offer would be subject to acceptance by holders of 100% of the outstanding senior notes, unless that requirement is waived by Viskase and the waiver if approved by the Ad Hoc Committee of current noteholders. The Committee members, collectively holding approximately 54% of the senior notes, agreed to accept the proposed exchange offer. The exchange offer would include a solicitation for a Chapter 11 plan for the company. If less than 100% of the outstanding senior notes were to accept the exchange offer but sufficient senior notes were to be exchanged to satisfy the voting requirements for acceptance of a Chapter 11 plan, the company would commence a voluntary Chapter 11 proceeding and submit a Chapter 11 plan containing substantially the terms set forth in the exchange offer. In the event the exchange offer is consummated through a bankruptcy proceeding, the company's current common stock would be canceled and new common stock would be issued, with 94% going to the current senior noteholders and the remaining 6% to the company's management. Holders of old common stock would meantime receive warrants to purchase shares of new common stock equal to 2.7% of the company's common stock. Assuming all warrants are exercised, holders of the senior notes would receive approximately 91.5% of the new common stock and approximately 5.8% would go to the company's management. Thus, the consideration received by all noteholders would be substantially the same regardless of whether the proposed restructuring occurs via an exchange offer or a prepackaged Chapter 11 plan.

Viskase further said that upon completion of the proposed restructuring, the company's board of directors would be reconstituted to consist of five members, including the Company's Chief Executive Officer and four other persons designated by the ad hoc committee of current senior noteholders.

The members of the ad hoc committee have agreed to support the proposed restructuring, including exchanging their senior notes and taking such other reasonable actions as necessary to consummate the proposed restructuring. In addition, the members of the ad hoc committee have agreed not to transfer (other than to another member of the ad hoc committee or an affiliate of a member) their shares of the new preferred stock for a period of two years after the exchange offer is completed, and for a period of one year thereafter, the company would have a right of first refusal to either purchase or designate a purchaser for shares of preferred stock to be transferred by a member of the ad hoc committee to a person other than another member of the ad hoc committee or their affiliates.

On Aug. 20, Viskase said in a Securities and Exchange Commission filing that it was beginning an offer to exchange new debt and preferred shares for the 10¼% notes under the previously announced restructuring agreement. It said the exchange offer, on the previously announced terms, would expire at 5 p.m. ET on Sept. 19, although this was subsequently extended, and that already tendered notes could be withdrawn any time up till then. Viskase said that if fewer than all of the existing notes were to be tendered, but at least two-thirds of the outstanding principal amount of the notes were tendered by a majority in number of the holders of all of the notes, it would then have to attempt to effect a prepackaged plan of reorganization under the Bankruptcy Code which would be substantially similar in economic effect to the exchange offer. Viskase said it was also soliciting noteholder consents to that plan concurrently with the exchange offer.

On Sept. 20, Viskase said that it had extended the exchange offer expiration to 5 p.m. on Oct. 18 (this was subsequently extended again) from the original Sept. 19 deadline. It said that as of that original date, $136.649 million principal amount of the existing notes, or 83.8% of the principal amount outstanding, had been tendered. It also said that consents to the company's prepackaged reorganization plan had been received from the holders of $112.948 million principal amount of the notes, or 69.3% of the amount outstanding.

Standard Commercial completes debt buyback program

Standard Commercial Corp. (B1/BB) said on Monday (Oct. 21) that it had completed its previously announced $20 million debt buyback program. It said that to date, term debt had been retired in three phases: a $25 million open market repurchase program begun in June 2000; the March, 2002 redemption of $25 million of 8 7/8% senior notes due 2005 issued by Standard Commercial's subsidiary, Standard Commercial Tobacco Co., Inc.; and the $20 million open market repurchase program announced in August.

AS PREVIOUSLY ANNOUNCED, Standard Commercial, a Wilson, N.C.-based leaf tobacco dealer and international wool trading company, said on Aug. 13 that it would begin a $20 million debt buyback program. Under the plan approved by the company's Board of Directors, open-market debt repurchases might be made "from time to time at prices the Company deems attractive."

Standard Commercial said that as of June 30, its outstanding public debt consisted of $47.1 million of Standard Commercial Corp. 7 ¼% convertible subordinated debentures due 2007 and $84 million of the Standard Commercial Tobacco Co. 8 7/8% notes.

Hawk Corp. completes 10¼% '03 notes exchange

Hawk Corp. (B2/B-) said on Friday (Oct. 18) that it had completed its previously announced offer to exchange new 12% senior notes due

2006 for its outstanding 10¼% senior subordinated notes due 2003 and the related solicitation of noteholder consents to proposed changes in the notes' indenture. That offer expired as scheduled at 11 a.m. ET on Friday, with no further extension. The company said that as of that deadline, $64.417 million of the notes, or approximately 99% of the outstanding amount, had been tendered and not subsequently withdrawn.

Hawk said that it expects to issue its new 12% notes in exchange for the 10 ¼% notes on Wednesday (Oct. 23).

Hawk also said that concurrently with the acceptance of the 10 ¼% notes for exchange, it completed its previously announced new credit facility with J.P. Morgan Business Credit Corp., JPMorgan Chase Bank, Fleet Capital Corporation and PNC Bank, National Association. The new credit facility has a maximum commitment of $53 million. Hawk said it will use the proceeds of the new credit facility to pay off its existing senior secured credit facility in full, pay transaction costs associated with the new credit facility and the exchange offer, provide for future working capital needs and for general corporate purposes.

Banc of America Securities (call (888-292-0070) was the exclusive dealer-manager for the exchange offer and consent solicitation;

D.F. King & Co. (banks and brokerage firms should call 212 269-5550; all others should call 800 290-6430) was the information agent, and HSBC Bank USA was the exchange agent.

AS PREVIOUSLY ANNOUNCED, Hawk Corp., a Cleveland-based manufacturer of friction products and precision industrial components, said in an S-4 filing with the Securities and Exchange Commission on Aug. 2 that it was beginning an offer to exchange new debt for its $64.725 million of outstanding 10¼% notes and was also soliciting the consent of the noteholders to proposed indenture changes. Hawk said it would exchange the new notes for the existing notes in order to extend the maturity of its debt, although neither the maturity nor the coupon of the proposed new notes was immediately specified in the filing. Hawk said that its domestic subsidiaries would guarantee the payment of interest and principal under the new notes. Hawk also did not formally set an expiration deadline for the offer, nor did it set a deadline for its consent solicitation. It said that the exchange offer and consent solicitation would be subject to the valid tenders of at least a majority of the outstanding notes, and subject to the refinancing of the existing credit facility on terms acceptable to the company and to other customary conditions.

Hawk said that holders tendering their notes would be deemed to have consented to the proposed indenture amendments, which would essentially eliminate all of the restrictive covenants, while holders would have to tender their notes in order to grant consent. It said that holders could withdraw tenders of the outstanding notes at any time before Hawk notifies the trustee for the old notes that it has received valid and unrevoked consents representing a majority of the outstanding notes. Hawk further said that it intends to pay a consent payment for notes tendered by the as-yet-unspecified consent deadline, but it did not specify the amount of that payment in its filing. Any notes which remain outstanding after the expiration of the exchange offer would be subject to the indenture changes, even if the holder did not tender the notes and grant consent.

On Sept. 12, Hawk filed an amendment to its previous S-4 filing, offering specific details about the tender offer for its 10¼% notes and the related consent solicitation. Hawk said initially that the offer to exchange the new notes for existing notes would expire at 5 p.m. ET on Thursday (Oct. 10), while the consent solicitation deadline would be 5 p.m. ET on Oct. 3, (both deadlines were subsequently extended).

Hawk said that it would exchange $1,025.63 principal amount of newly issued 12% senior notes due 2006 per $1,000 principal amount of the existing notes; that total consideration figure includes a consent payment of $25.63 principal amount of the new notes per $1,000 principal amount of the existing notes, for consents received by the consent payment deadline. Hawk said it would also pay all tendering holders accrued and unpaid interest, in cash. It said that besides having a different coupon and maturity date, the new notes would have different interest payment dates and a different optional redemption schedule than the old notes and some additional limitations on Hawk's ability to incur debt. Under certain circumstances, the company said it might be required to pay additional interest, which could be paid in the form of additional new notes. The other terms of the new notes will be substantially the same as the old notes (before giving effect to the proposed amendments to the old indenture).

On Oct. 2, Hawk said that it had extended the consent payment deadline to 5 p.m. ET on Oct. 10, subject to possible further extension, from the originally announced deadline of 5 p.m. ET on Oct. 3. The consent deadline, as extended, thus coincides with the expiration deadline for the exchange offer (both were subsequently further extended). On Oct. 4, Hawk said it had extended the offer expiration and consent payment deadlines on its offer to 5 p.m. ET on Oct. 11 from the previous Oct. 10 deadline. And said that as of 5 p.m. ET on Oct. 3, $15.147 million of the existing notes had been tendered and not withdrawn in the exchange offer. Hawk also said that it was modifying certain restrictive covenants and other related provisions of the new (12%) notes' indenture. The changes are described in detail in a supplemental prospectus, dated Oct. 4, that has been filed with the SEC and sent to the holders of the existing notes, although the company said publicly that neither the cash coupon or maturity date of the new notes, nor the consent payment under the offer, had been changed.

On Monday (Oct. 14), Hawk announced it had received valid and unrevoked consents representing a majority of the outstanding existing notes. As of 5 p.m. ET on Oct. 11, $52.564 million of the existing notes, or approximately 81% of the outstanding amount, had been validly tendered and not withdrawn (up from the $15.147 million previously reported to have been tendered as of Oct. 3). The company said that as per the proposed amendments to the indenture, the guarantees of the existing notes and substantially all covenants relating to those notes will be eliminated, and as a result, any remaining old notes will be structurally subordinated to the new notes and note guarantees issued in the exchange offer. Hawk further said that it was again extending the expiration of the exchange offer and the consent payment deadline until 11 a.m. ET on Tuesday (Oct. 15). The company said it expects to close the exchange offer as soon as practicable thereafter.

Hawk subsequently extended the offer on Oct. 16, Oct. 17 and Oct. 18, the final time to 11 a.m. ET that day. It said that as of 5 p.m. ET on Oct. 15, $64.417 million of the existing notes, or approximately 99% of the outstanding amount, had been validly tendered and not withdrawn.

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