American Greetings plans tender offer for 11¾% notes

New York, March 31 - American Greetings Corp. (Ba3/BB+) said it plans a cash tender offer for all of its $196.4 million of outstanding 11¾% senior subordinated notes due 2008, as well as a related solicitation of noteholder consents aimed at eliminating certain restrictive covenants and events of default from the notes' indenture.

American Greetings, a Cleveland-based greeting card maker, expects to begin the tender offer on April 14. It said the expected consent deadline would be April 27. The price for the notes would be set on May 6, and the expected expiration date would be May 12, with all deadlines subject to possible extension.

At the pricing deadline of 2 p.m. ET on May 6, the company expects to set the tender offer consideration it will offer the noteholders, using a formula based on the redemption price of the notes plus scheduled interest to July 15, 2005 - the first optional redemption date. The formula will be computed using a fixed spread over the yield at the pricing deadline of the reference security, the 1½% U.S. Treasury note due July 31, 2005.

Total consideration will also include a consent payment - the amount of which has not been announced yet - for holders tendering their notes and delivering their consents by the consent deadline. In addition, accrued and unpaid interest up to, but not including, the payment date will be paid on all tendered notes.

The tender offer and consent solicitation will be subject to several conditions, including the execution of an amendment to the credit agreement for the company's revolving credit facility; the tender of at least a majority of the notes and the receipt of a like amount of consents from their holders; execution of a supplemental indenture amending the note indenture; and other customary conditions.

American Greetings anticipates receiving the credit facility amendment by the expiration date of the tender offer.

The company is undertaking the planned tender offer and consent solicitation to reduce its future interest expense and to increase its financial flexibility.

It plans to formally begin the offer by providing noteholders with the official offer to purchase and consent solicitation document, and will issue an additional public statement announcing the actual beginning of the offer.

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