Titan extends exchange offer for 8% notes, scrubs consent solicitation following Lockheed merger failure

New York, June 28 - Titan Corp. (B2/B) said it again extended its exchange offer for its outstanding 8% Rule 144A senior subordinated notes due 2011, to 5 p.m. ET on July 13, subject to possible further extension, from 5 p.m. ET on June 25. Holders of notes will continue to have withdrawal rights until the expiration of the exchange offer.

Titan said that as of the old deadline, 100% of the $200 million of outstanding notes had been tendered for exchange and not withdrawn - unchanged from the investor participation level announced on June 21, when the offer had last been previously extended.

However, Titan also said that it had terminated its previously announced solicitation of noteholder consents to proposed indenture changes aimed at facilitating Titan's proposed merger with Lockheed Martin Corp.; Lockheed Martin had terminated the merger agreement on June 26 after Titan's failure to reach a plea agreement with the Department of Justice relating to previously announced allegations that Titan or its subsidiaries may have made improper payments to officials of foreign governments.

With the termination of the consent solicitation, Lockheed Martin also terminated its previously announced offer to guarantee Titan's obligations as the obligor of the notes, which had been conditioned on closing the merger. Titan said that as a result, the existing indenture and the registration rights agreement - without giving effect to the proposed amendments for which it had been soliciting consents - will continue to govern Titan's obligations. Noteholders who had consented to the proposed amendments will not receive a previously announced consent fee.

As previously announced, Titan, a San Diego-based provider of comprehensive information and communications systems solutions and services to the federal government, said on Feb. 11 that it had begun soliciting the consent of the holders of the 8% notes to proposed indenture changes aimed at facilitating its previously announced acquisition by Lockheed Martin, a merger deal which had been announced in mid-September, but which was eventually cancelled. Receipt of consents from holders at least a majority of the noteholders had been one of the conditions to the closing of the merger deal.

Titan said that the consent solicitation was being conducted in conjunction with the offer to exchange the $200 million of 8% notes, which had been issued as unregistered securities in a Rule 144A/Regulation S placement in May of 2003, for identical securities registered with the Securities and Exchange Commission for public trading.

Titan set a consent deadline of Feb. 25 by which holders had to consent to the amendments to receive a consent fee upon completion of the merger. It announced on Feb. 26 that it had received the necessary consents from holders of more than a majority of the principal amount of the notes. Titan said it entered into a supplemental indenture incorporating the desired amendments but added that it would not become effective until immediately before the (now-cancelled) acquisition was consummated.

Titan also originally said that the consent solicitation, along with the exchange offer, would expire at 5 p.m. ET on March 12. The deadlines were subsequently extended several times, as completion of the merger with Lockheed Martin was delayed as Titan attempted to resolve the Justice Department concerns about the payoff allegations.

Titan had last extended the exchange offer and consent solicitation on June 21, pushing the expiration back to 5 p.m. ET on June 25, (the exchange offer was subsequently extended) from 5 p.m. ET on June 18. It said that as of the close of business on June 18, 100% of the $200 million outstanding principal amount of the notes had been tendered for exchange - up from the 71.4% of the notes tendered as of 5 p.m. June 3, which was announced on June 4, when the company had last previously extended its offer.

It noted at that time that Titan had until June 25 to enter into a plea agreement with the Justice Department, and that in the absence of such an agreement, either party could terminate the merger agreement at any time after that, leading to Lockheed Martin's announcement on June 26 terminating the merger.

The dealer-manager and the exchange offer is Credit Suisse First Boston LLC, which also served as the solicitation agent for the now-cancelled consent solicitation. The exchange agent is Deutsche Bank Trust Co. Americas. Morrow & Co. Inc. is the information agent (banks and brokerages call 800 654-2468; bondholders call 800 607-0088).

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