Merrill begins 9% '09 notes exchange offer

Merrill Corp. (Caa3) said Monday (July 8) that it had begun an offer to exchange new senior subordinated notes, cash and warrants for any and all of its outstanding 12% senior subordinated notes due 2009. The exchange offer is being undertaken as part of a previously announced recapitalization plan for the company. Under terms of the offer, holders of the existing 12% notes that participate in the exchange offer will receive new Class A senior subordinated notes due 2009, new Class B senior subordinated notes due 2009, and new Series A warrants. Each warrant will entitle its holder to purchase one share of Class B common stock of Merrill Corp. The company said that it would give the holders of the existing notes who validly tender them (and do not subsequently withdraw them) by the 5 p.m. ET on Aug. 1 offer expiration deadline the following compensation per $1,000 principal amount of the existing 12% notes tendered: 1) $60.00 in cash; 2) $185.19 aggregate principal amount of the new Class A notes; 3) $814.81 aggregate principal amount of the new Class B notes; 4) an additional principal amount of Class B notes in lieu of payment of certain overdue interest payments on the exchanged outstanding 12% notes; and 5) 1.82 Series A warrants. The company further said that certain overdue and accrued interest on the exchanged existing 12% notes will be paid to holders of the new notes through a special payment on Dec. 31. It added that holders who tender their existing notes will be required to give their consent to certain proposed amendments to the terms of the old notes' indenture.

AS PREVIOUSLY ANNOUNCED, Merrill Corp., a St. Paul, Minn.-based diversified communications and document services company said on June 3 that it had reached an agreement on a proposed recapitalization plan that would waive or cure existing defaults under its senior credit facilities as well as the outstanding notes, and which would inject additional capital into the company. Merrill said that under the proposed plan, its largest shareholder, DLJ Merchant Banking Partners II, LP, would invest $18.5 million in Merrill upon the final effectiveness of an amendment to the senior credit facility and the successful exchange and amendment of Merrill's outstanding senior subordinated notes and senior preferred shares. The company's senior lenders agreed not to exercise their rights and remedies under the senior credit facility as a result of previously disclosed defaults until at least Aug. 14, giving Merrill time to complete the recapitalization plan. It said that holders of approximately 77% of the outstanding 12% notes and of 100% of Merrill's senior discount notes due 2008 and its senior preferred shares entered into a lockup agreement with Merrill in support of this proposed recapitalization, subject to certain terms and conditions. Merrill said that it planned to launch an exchange offer and consent solicitation for the senior subordinated notes, the senior discount notes and senior preferred shares within the next 30 days, in order to complete the plan. It said that the financial advisor for the senior subordinated noteholders was Chanin Capital Partners, and the information agent for the exchange offer would be D. F. King & Co., Inc. (call 800 848-3409).

Clear Channel completes tender offer for Ackerley Group 9% ' 09 notes

Clear Channel Communications Inc. (Baa3/BBB-) said on June 28 that it has accepted for purchase $198,934,000 in principal amount of the 9% senior subordinated notes due 2009 of The Ackerley Group Inc. (B3/BB+) tendered under Clear Channel's previously announced tender offer and related solicitation of consents to proposed indenture changes, which expired at 5:00 p.m. ET on June 28 without extension.

AS PREVIOUSLY ANNOUNCED, Clear Channel, a San Antonio, Tex.-based radio and television broadcaster and outdoor advertising company, said on May 31 that it was beginning a cash tender offer for the $200 million of outstanding 9% senior subordinated notes due 2009 originally issued by The Ackerley Group Inc., a Seattle-based outdoor advertising firm with television and radio broadcasting interests. Clear Channel was also beginning a related solicitation of noteholder consents to proposed indenture amendments and a waiver of certain indenture provisions. The tender offer and consent solicitation followed the final approval by the Federal Communications Commission on May 30 of Clear Channel's proposed acquisition of Ackerley Group, under terms of an all-stock deal originally announced last October 5. Clear Channel set midnight ET on June 13 as the consent payment deadline, while the tender offer was scheduled to expire at 5 p.m. ET on June 28, with both deadlines subject to possible extension. Clear Channel said it planned to set the purchase price for validly tendered Ackerley notes on the second business day before the tender offer was to expire (the price was set on that date, June 26) . It said the price would be based upon a 75-basis point fixed spread over the yield on the reference security, the 3% U.S. Treasury Note due Jan. 31, 2004. The total purchase price would include a consent payment, equal to 2.5% per $1,000 principal amount of notes tendered (i.e., $25 per $1,000 principal amount). Clear Channel said assuming the tendered notes were accepted for purchase, holders who tendered their notes by the consent payment deadline would receive the total purchase price, including the consent payment, while those tendering after the consent payment deadline but before the expiration deadline would only receive the total purchase price minus the consent payment. A holder could not tender notes without delivering a corresponding consent to the indenture changes and the waiver, or vice versa. All tendering holders would also receive accrued but unpaid interest up to, but not including, the date of payment. Clear Channel asked the Ackerley noteholders to approve indenture amendments and the waiver of the indenture provisions (by tendering their notes by the consent payment deadline), with the amendments and the waiver described in detail in the official Offer to Purchase. It said they would be set forth in a second supplemental indenture, but would not become operative until the execution of that second supplemental indenture, which would follow the receipt of consents from holders of a majority of the outstanding notes. However while the amendments becoming operational was conditioned upon the valid tender and purchase of the notes under the terms of the tender offer, the waiver would not depend on the valid tender and purchase of the notes, but would become operative upon execution of the second supplemental indenture. It said once the consent payment deadline had passed and holders of a majority of the outstanding notes had tendered their notes and had given their related consents, and notice that the notes had been tendered and the consents delivered had been given to the notes' indenture trustee, a holder could not withdraw his tender of notes and related consents. Clear Channel said the tender offer would be conditioned upon - among other things - (i) the receipt of valid and unrevoked consents from holders of a majority of the notes; (ii) the consummation of Clear Channel's merger with Ackerley Group; and (iii) the satisfaction of certain other terms and conditions, which were described in the official Offer to Purchase. On June 14, Clear Channel said that it had received sufficient consents to the desired indenture changes from the Ackerley noteholders. The consent solicitation period expired as scheduled at midnight ET on June 13 without extension. Clear Channel said only those holders who had tendered their notes by the consent deadline would be eligible to receive the consent payment as part of their total purchase price, and added that they now could not withdraw their tenders and related consents. On June 26, Clear Channel said that it had set the total purchase price for the Ackerley Group 9% notes, based on the yield on the designated reference security at 2 p.m. ET that day. Clear Channel said the total purchase price to be paid for each validly tendered and consented note would be $1,129.28 per $1,000 principal amount of notes, plus accrued and unpaid interest up to, but not including, the payment date. The total purchase price would include the consent payment where applicable, as previously outlined. Payment for the notes and consent payments, if applicable, was expected to be made on July 3. Salomon Smith Barney (call 800 558-3745) was the dealer manager for the tender offer and the consent solicitation; Mellon Investor Services LLC (call 888 509-7937) was the information agent.

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