American Cellular accepts $711 million 10% notes at early tender deadline

By Jennifer Chiou

New York, March 15 - American Cellular Corp. said it accepted on a pro rata basis tenders from holders of $711 million of its 10% senior notes due 2011 in the offer for $675 million of notes at the early acceptance deadline.

The company said it received valid tenders from holders of $851.2 million, or 94.6%, of the notes as of 5 p.m. ET on March 13.

The tender offer expiration is midnight ET on March 19, pushed back from March 15.

On March 6, the company lowered the maximum amount it will repurchase to $675 million from $900 million.

As already reported, the company planned to fund the tender offer with proceeds from the sale of $425 million new senior notes and a new senior secured credit facility of up to $850 million, but then canceled the note deal on March 6, citing recent volatility in the bond markets, and increased the size of the credit facility to $1.05 billion.

American Cellular now plans to fund the tender offer with borrowings under the new credit facility, which will replace its existing $250 million senior secured credit facility.

As of March 1, holders of 97% of the $900 million outstanding notes had tendered and submitted consents, so the company had said it would accept the notes on a pro rata basis.

The company began the tender offer and a consent solicitation to amend the note indenture to remove substantially all of the restrictive covenants on Feb. 14.

The tender consideration is $1,065.56 for each $1,000 principal amount of notes. It was determined on March 1 based on a fixed spread of 50 basis points over the yield on the 3 7/8% U.S. Treasury note due July 31, 2007. The reference yield and the tender offer yield were 5.044% and 5.544%, respectively.

The company will also pay accrued interest up to but excluding the settlement date.

The tender consideration includes a consent fee of $30.00 per $1,000 principal amount for noteholders who tendered by 5 p.m. ET on March 1, the consent deadline.

Morgan Stanley & Co. Inc. is the dealer manager and solicitation agent (800 624-1808 or call collect 212 761-5384, attention: Tate Forrester). Bondholder Communications Group is the information and tender agent (212 809-2663, attention: Denise Conway).

American Cellular is a wholly owned subsidiary of Dobson Communications Corp., an Oklahoma City-based provider of wireless phone services to rural markets in the United States.

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