Knight's tender offer for up to $1.6 billion of bonds oversubscribed at early deadline

By Angela McDaniels

Tacoma, Wash., March 6 - Knight Inc., formerly Kinder Morgan, Inc., said that due to a high level of participation in its tender offer for up to $1.6 billion of bonds, it will not purchase any tendered notes with an acceptance priority level of 4, 5 or 6. Notes in those priority levels that have been tendered will be returned.

The tender offer began on Feb. 21 and ends at midnight ET on March 19.

As of 5 p.m. ET on March 5 - the early tender deadline - holders had tendered:

• $86.34 million of KN Capital Trust I's $100 million outstanding 8.56% series B pass-through securities due 2027. Knight will pay $1,000 per $1,000 principal amount, including a $30 early tender premium. These securities are priority level 1;

• $159.91 million of KN Capital Trust III's $175 million 7.63% capital securities due 2028. Knight will pay $930 per $1,000 principal amount, including a $30 early tender premium. These securities are priority level 1;

• $124 million of KN Energy, Inc.'s $150 million 7.45% senior debentures due 2098. Knight will pay $920 per $1,000 principal amount, including a $30 early tender premium. These securities are priority level 1;

• $460.83 million of KN Energy's $493 million 7¼% senior debentures due 2028. Knight will pay $1,000 per $1,000 principal amount, including a $30 early tender premium. These securities are priority level 1;

• $142.95 million of KN Energy's $150 million 6.67% debentures due 2027. Knight will pay $960 per $1,000 principal amount, including a $30 early tender premium. These securities are priority level 1;

• $513.46 million of Kinder Morgan Finance Co. ULC's $550 million 6.4% senior notes due 2036. Knight will pay $905 per $1,000 principal amount, including a $30 early tender premium. These securities are priority level 1;

• $18.86 million of KN Energy's $30 million 6½% debentures due 2013. Knight will pay $1,010 per $1,000 principal amount, including a $20 early tender premium. These securities are priority level 2; and

• $855.97 million of Kinder Morgan's $1 billion 6½% senior notes due 2012. Knight will pay $1,040 per $1,000 principal amount, including a $20 early tender premium. These securities are priority level 3.

The company will also pay accrued interest to the payment date, which was expected to be Thursday for first-priority notes tendered by the early deadline and March 24 for all other accepted notes.

Only noteholders who tendered by the early tender deadline will receive the early tender premium.

Tenders for Kinder Morgan Finance's $850 million 5.7% senior notes due 2016, Kinder Morgan Finance's $750 million 5.35% senior notes due 2011 or Kinder Morgan's $250 million 5.15% senior notes due 2015 were not accepted. These notes were priority level 4, 5 and 6, respectively.

The Houston-based energy transportation and storage company will fund the offer with part of the proceeds from its recently completed sale of MidCon Corp., cash on hand and, to the extent necessary, borrowings under its $1 billion senior secured revolving credit facility.

Citi (call collect 212 723-6106 or 800 558-3745) and Merrill Lynch & Co. (call collect 212 449-4914 or 888 654-8637) are dealer managers for the offer. The information agent and depositary is Global Bondholders Services Corp. (212 430-3774 or 866 470-4200).

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