IKON Office Solutions in partial tender for 7¼% notes

New York, March 29 - IKON Office Solutions (Ba1/BB) said its U.S. leasing subsidiary, IOS Capital LLC, is tendering for up to $250 million of the outstanding $345 million of 7¼% notes due 2008.

It set an early tender deadline of 5 p.m. ET on April 12 and said the tender offer would expire at 5 p.m. ET on April 26, with both deadlines subject to possible extension.

IKON, a Valley Forge, Pa.-based provider of document workflow products and services to businesses, said that it intends to finance the tender offer with a portion of the net proceeds from its previously announced sale of certain assets and liabilities to General Electric Capital Corp. In connection with the GE transaction, IOS Capital will merge into IKON and IKON will assume all of IOS Capital's debt obligations concerning the 7¼% notes and the tender offer.

IKON said it will offer tendering noteholders who tender their notes by the early tender deadline total consideration of $1,105 per $1,000 principal amount of notes tendered and accepted for purchase by the company, a figure which includes a $25 per $1,000 early tender premium. Holders tendering their notes after the early tender deadline will receive $1,080 per $1,000 principal amount but no early tender premium.

All tendering holders whose notes are accepted for purchase will also receive accrued and unpaid interest up to, but not including, the settlement date.

Notes tendered before the early tender deadline may be withdrawn from the tender offer before that deadline. Other than in the limited circumstances described in the official offer to purchase document, notes previously tendered and not withdrawn by the early tender deadline, and any notes tendered after that deadline, may not be withdrawn from the tender offer.

Since the maximum amount of notes being tendered for is less than the total outstanding, the company said that if the amount of notes validly tendered and not withdrawn exceeds $250 million, it will accept validly tendered notes for payment on a pro rata basis (with adjustments to avoid the purchase of notes in a principal amount other than in integral multiples of $1,000). If such pro ration is required, the company will determine the final pro ration factor as promptly as practicable after the expiration date.

IKON said it plans to use the net cash proceeds from the GE transaction to improve its financial flexibility, pay transaction-related deferred taxes and for general corporate purposes including expanding its options for share repurchases and other strategic alternatives. IKON said its obligation to accept for purchase and to pay for notes which are validly tendered in the tender offer is conditioned on, among other things, the consummation of the GE transaction.

Deutsche Bank Securities Inc. (Contact Jenny Lie toll-free at 866 627-0391 or collect at 212 250-7445), Wachovia Capital Markets LLC and PNC Capital Markets Inc. will serve as dealer managers for the tender offer, and D.F. King & Co. Inc. is the information agent (call 800 829-6550 or collect at 212 269-5550).

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