Kellwood starts consent solicitation for 3.5% convertibles

By Jennifer Chiou

New York, March 31 - Kellwood Co. announced a consent solicitation for its 3.5% convertible senior debentures due 2034.

The St. Louis-based apparel and consumer soft goods marketer is seeking a waiver of the holders' right to require it to repurchase the securities on April 10.

Those who consent will receive a payment of $226.00 per $1,000 principal amount.

The solicitation ends at midnight ET on April 9.

In addition, all debentures outstanding following the settlement of the company's acquisition by Sun Capital Securities Group, LLC will receive a second lien on the collateral securing Kellwood's existing credit facility, which consists of substantially all of the intellectual property, accounts receivable, inventory, deposit accounts and other personal property of Kellwood and its co-borrowers under the existing credit facility, as well as a new covenant requiring the provision of annual and quarterly financial information of Kellwood.

On Feb. 20, Sun Capital completed its $767 million acquisition of Kellwood through a short-form merger of Sun Capital affiliate Cardinal Integrated, LLC with and into Kellwood.

As already noted, Kellwood became a wholly owned subsidiary of Cardinal Integrated and the short-form merger followed the close of Cardinal Integrated's $21-per-share tender offer for Kellwood shares.

It was previously reported that Sun Capital and Kellwood entered into a merger agreement that would give Sun Capital control of Kellwood's board of directors following the successful completion of the tender offer.

The solicitation for the convertibles is not conditioned on the receipt of any minimum percentage of waivers received, but rather is being made on a holder by holder basis.

All non-consenting holders will retain the right to require Kellwood to purchase their debentures.

In addition, the delivery of a waiver will not affect:

• A holder's right to receive 100% of the principal amount of the debentures at maturity on June 15, 2034, or right to require Kellwood to repurchase its debentures on the scheduled redemption dates provided in the indenture, the earliest of which is June 15, 2011;

• Any other rights of a holder under the debentures, other than the fundamental change repurchase option; or

• A holder's right to require Kellwood to repurchase the debentures upon a future fundamental change.

The solicitation is eligible for the DTC automated tender offer program. Holders who wish to consent to the proposed waiver must deliver consents through the DTC program.

If a holder has previously delivered a fundamental change repurchase election and now wishes to deliver a consent in the solicitation, the holder must first withdraw the repurchase election by delivering a notice of withdrawal to the Union Bank of California, NA (attn: Josefina Benanvides, 213 972-5679 or by fax at 213 972-5695). Withdrawal must occur by midnight ET on April 9.

Banc of America Securities LLC is the solicitation agent (888 292-0070 or call collect 704 388-4813. D.F. King & Co., Inc. is the information agent and depositary (800 269-6427 or call collect 212 269-5550).

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