LBI Media settles private exchange offers for 8½% notes, 11% notes

By Susanna Moon

Chicago, Jan. 3 - LBI Media, Inc. settled the private exchange offers on Dec. 31 for any and all of its 8½% senior subordinated notes due 2017 and any and all of LBI Media Holdings, Inc.'s 11% senior discount notes due 2013.

The company offered to exchange its 8½% senior subordinated notes for new 11½%/13½ payment-in-kind second-priority senior secured notes due 2020 and warrants to purchase class A common stock and to exchange LBI Media Holdings' 11% senior discount notes for either the 11½%/13½ PIK notes second-priority senior secured notes or new 11% senior notes due 2017.

The private exchange offers ended at midnight ET on Dec. 24. The offers began on July 17 and were extended several times, most recently on Dec. 12.

By the end of the offers, investors had tendered $174.6 million, or 76.3%, of the 8½% notes and $30.9 million, or 73.8%, of the 11% discount notes.

As a result, the company issued $115.2 million principal amount of 11½%/13½ PIK second-priority senior secured notes due 2020, $21.1 million principal amount of new 11% senior notes due 2017 and 106.1559 warrants, according to a company press release.

The final tally remains unchanged for the 8½% notes since Dec. 3 and is up from $30.4 million, or 72.7%, of 11% notes tendered by the most recent deadline on Dec. 14.

That compares with tenders for $60.5 million, or 26.4%, of the 8½% notes and $29.8 million, or 71.3%, of the discount notes not held by the company as of 5 p.m. ET on Nov. 19.

Recent offer changes

The company most recently amended the terms of the offers on Dec. 11 to revise the offer payment. The coupons bumped up from the previous 11%/13% PIK notes.

Interest on the second-priority secured subordinated notes was also revised so that on or prior to Nov. 15, 2015, it will accrue at 11½% per year, with 8¾% payable in cash plus 2¾% in additional PIK second-priority secured subordinated notes, or 13½% per year, with 4¼% payable in cash plus another 9¼% in additional PIK second-priority secured subordinated notes.

Beginning on Nov. 15, 2015, interest will accrue at 11½% per year, with 8¾% payable in cash plus 2¾% in additional PIK second-priority secured subordinated notes, provided that the last interest payment will be entirely in cash.

Previous offer changes

The company previously revised the offer payment on Nov. 20. The offers were also revamped so that holders who tender their notes by the end of the offers could receive the total payment, rather than just those who tendered by the early deadline.

At the time, LBI offered 11%/13% payment-in-kind second-priority senior secured notes due 2020 and class A common stock purchase warrants for any and all outstanding 8½% senior subordinated notes instead of the previously offered 11% second-priority secured springing subordinated notes due 2020.

Before that, the company had offered new 11% second-priority secured notes instead of the originally announced 11% senior secured notes due 2019 for the 8½% notes.

LBI further amended the exchange offers to offer either the PIK toggle notes, instead of the previously offered springing subordinated notes, or new 11% senior notes due 2017 for any and all of the outstanding discount notes.

For each $1,000 principal amount of 8½% subordinated notes, LBI Media, Inc. would issue $600 of PIK toggle notes, instead of $700 of new springing subordinated notes previously planned, and up to 0.000685788 warrants.

For each $1,000 principal amount of 11% discount notes, LBI Media, Inc. would issue $400 of the PIK toggle notes or, if holders elect to receive senior notes due 2017 instead, $1,000 of the senior notes.

As noted before, the total amount of PIK toggle notes issued in exchange for the discount notes could not exceed $9.8 million, which, if necessary, would have been allocated on a pro rata basis.

Holders of both the old subordinated notes and the discount notes received accrued interest.

Before the Nov. 20 amendment, if a majority of the principal amount of the 8½% notes were tendered and accepted, the springing subordinated notes would have been subordinated in right of payment to all existing and future senior debt of LBI Media. The terms of the second-priority secured notes (now the PIK toggle notes instead of the springing subordinated notes) were revised so that the notes are equal in right of payment to LBI Media's existing and future debt, regardless of the amount of old notes tendered.

As also noted before, LBI withdrew its consent solicitation to amend the 8½% note indenture to eliminate certain events of default, modify covenants and modify or eliminate other provisions, including, in some cases, provisions relating to defeasance.

9¼% notes solicitation

The company also solicited consents from holders to amend the indenture of its 9¼% senior secured notes due 2019. The solicitation ended on Dec. 24, extended from Dec. 14.

The consent solicitation for the 9¼% notes was amended before to reflect the new terms of the exchange offers and to increase the interest rate on the notes to 10¼% regardless of the amount of 8½% notes tendered and accepted in the exchange offers.

As noted previously, the company paid $5.00 in cash per $1,000 principal amount of the notes.

As of 5 p.m. ET on Nov. 19, consents had been received for $212 million, or 96.4%, of the 9¼% notes.

D.F. King & Co., Inc. (212 269-5550 for brokers and banks or 800 431-9645 for all others) is the information agent and exchange agent for the exchange offers and solicitation of consents.

LBI Media is a Burbank, Calif., owner and operator of Spanish-language radio and television stations.

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