Millicom amends, extends exchange offer

Millicom International Cellular SA said it amended and extended its exchange offer and consent solicitation for its 13½% senior subordinated discount notes due 2006.

Millicom said that it has received commitments from approximately 50% of the holders of the existing notes to exchange their securities under the revised terms and that these terms have become binding on these holders and are no longer subject to the completion of a due diligence review.

Subject to the remaining members of the ad hoc committee of noteholders, representing an additional 18% of the holders, entering by April 16 into similar binding commitments to tender, Millicom has agreed to amend the terms of the exchange.

Under the proposed amended terms, for each $1,000 principal amount of the existing notes holders will receive $720 of new 11% senior notes due 2006 and $81.7 of new 2% senior convertible PIK notes due 2006. Both will mature June 1, 2006. The notes would result in a maximum dilution to existing Millicom stockholders of approximately 30%, assuming no issuance of PIK notes in lieu of cash interest.

The 11% notes will have semi-annual amortization payments due June 1, 2004, Dec. 1, 2004, June 1, 2005 and Dec. 1, 2005.

The 2% convertibles would be convertible into Millicom's common stock at a price of $10.75 per share, allowing for Millicom's recent reverse stock split. At maturity or on redemption, Millicom would have the right at its option to pay the outstanding principal amount of the 2% notes plus accrued interest in cash or stock.

Both series of notes would be guaranteed by Millicom's subsidiary Millicom International Operations BV.

In addition, under the revised offer Millicom would continue to solicit consents to certain amendments to the indenture of the existing notes. Millicom will make a consent payment of $50 per $1,000 principal amount of existing notes for which a valid consent is delivered, providing at least a majority consent.

The exchange was extended to 5.00 p.m. ET on April 16.

AS PREVIOUSLY ANNOUNCED: Millicom, a Bertrange, Luxembourg-based telecommunications investor, said on Jan. 21 that it had begun an offer to exchange two issues of new debt for all of the outstanding 13½% notes, and had also begun a related solicitation of noteholder consents to proposed indenture changes.

Millicom initially said that the exchange offer and consent solicitation would expire at 5 p.m. ET on Feb. 20 (this was subsequently extended).

It said that the exchange offer was being made in a private offering only to U.S. holders of the existing notes who could be considered either "qualified institutional buyers" or "accredited investors" or to holders who are not "U.S. persons," as all of these terms are defined by the Securities Act of 1933.

The company said that holders of the existing notes validly tendering them for exchange would receive $600 of Millicom's newly issued 9% senior notes due 2005, plus $75 of Millicom's newly issued 4% senior convertible PIK (payment-in-kind) notes due 2005 per $1,000 of the existing notes.

It noted that the new 4% notes would be convertible into Millicom's common stock at any time after April 1 at a conversion price of $5 per share, which could result in a dilution to existing Millicom stockholders of approximately 22% (assuming the company issues no additional PIK notes in lieu of cash interest). At their maturity or upon their redemption, Millicom - at its option - may pay the then-outstanding principal amount of the 4% notes in whole or in part, plus the accrued and unpaid interest on the notes, either in cash or in shares of its common stock.

Millicom said that its wholly owned Millicom International Operations BV subsidiary will irrevocably and unconditionally guarantee both the new 9% notes and the new 4% notes.

On Feb. 20, Millicom said that it had extended the exchange offer to 5 p.m. ET on Feb. 28, subject to possible further extension, from the original Feb. 20 deadline.

Millicom also confirmed that it had been notified that an ad hoc committee of bondholders had been formed and had retained Houlihan Lokey Howard & Zukin as financial advisers and Orrick, Herrington & Sutcliffe as legal advisers. Millicom said it had conversations with this ad hoc committee, and was extending the exchange offer and consent solicitation "to facilitate the continued dialogue."

Millicom subsequently extended the exchange several more times.

The company said that the rights of withdrawal for those bondholders who had already tendered their acceptance to the exchange offer and consent solicitation would continue until the new expiration date, in accordance with the terms of the private offering documents.

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