Temple-Inland Inc. (TIN) (Baa2/BBB) said Tuesday (Jan. 8) that its previously announced tender offer for the outstanding 9 3/8% senior notes due 2007, the 9¾% senior notes due 2007 and the 9 7/8% senior subordinated notes due 2008 of GAYLORD CONTAINER CORP. (GCR) (senior at Caa2/CCC+; subordinated at Caa3/CCC) had expired as scheduled at midnight ET on Jan. 7 without further extension, with the minimum tender conditions not satisfied. As of the deadline, $42.799 million of the 9 3/8% notes, $59,639,500 of the 9¾% notes and $10,085 million of the 9 7/8% notes had been tendered, well below the needed participation threshold. Some 47.198 million shares of common stock, or about 84% of the outstanding amount, had been tendered under a separate but concurrent equity tender offer, exceeding the threshold. Accordingly, Temple-Inland said it will not accept for payment or pay for any notes or any shares tendered. All tendered shares and/or notes will be returned promptly to their holders. Because the tender conditions were not satisfied, Temple-Inland said its merger agreement with Gaylord has been terminated. AS PREVIOUSLY ANNOUNCED, Temple-Inland, an Austin, Tex.-based maker of packaging materials, said Sept. 28 that it would acquire all of the outstanding junk bond debt of Gaylord, as part of its $786 million acquisition of the Deerfield, Ill.-based packaging materials maker. Temple-Inland said it would also tender for all of Gaylord's outstanding shares, and said certain outstanding bank debt and other senior secured debt obligations of Gaylord would be paid or otherwise satisfied. The $786 million figure assumed that all shares and all notes would be tendered and broke down into approximately $100 million to purchase all of the shares at $1.80 per share, and approximately $686 million to acquire all the notes and to satisfy the bank debt and other senior secured debt obligations. The equity and debt tender offers were originally scheduled to expire on Oct. 26, but both were subsequently extended. Temple-Inland, which also sought the consent of the Gaylord noteholders to amending the notes' indentures to remove certain restrictive covenant and other Gaylord contractual obligations, initially set midnight ET on Oct. 12 as the consent payment deadline, but subsequently announced on Oct. 11 that it had also extended that deadline to Oct. 26 in order to allow time for resolution of certain legal issues involving the two companies and Absolute Recovery Hedge Fund, LP and Absolute Recovery Hedge Fund, Ltd.; there was no subsequent announcement of any official consent deadline extension beyond that date. Temple-Inland initially said that Holders of the 9 3/8% and 9¾% senior notes tendering by the extended consent deadline would receive total compensation of $755 per $1,000 principal amount, including a $20 per $1,000 consent payment. Holders of the 9 7/8% senior subordinated notes would receive total consideration of $260 per $1,000 principal amount, including the $20 consent payment. Temple-Inland announced on Dec. 3 that it had amended the terms of the debt tender offer, raising the amount it would offer to pay as total consideration to holders of the 9 3/8% and 9¾% senior notes tendering by the extended expiration deadline to $875 per $1,000 principal amount, from $755 per $1,000 previously, and raising the amount it would pay to holders of its 9 7/8% senior subordinated notes to $400 per $1,000 principal amount from $260 per $1,000 previously. All holders would also be eligible to receive accrued and unpaid interest. While the original debt total consideration included a $20 per $1,000 principal amount consent payment for each series of notes, where applicable, the revised consideration eliminated the consent payment, so that no consent payment would be paid on any of the notes tendered prior to any previously existing consent deadline. Temple-Inland also amended the terms of the equity offer by reducing the price it would pay for Gaylord shares to $1.25, from $1.80 per share; Gaylord's board of directors unanimously recommended that shareholders accept the revised offer. Further, certain current and former Gaylord senior executives agreed to reduce by approximately $16.9 million total (approximately 43%) the benefits they would otherwise be entitled to upon completion of the Temple-Inland/Gaylord merger, under terms of the change-of-control provisions contained in their contracts or in Gaylord's supplemental executive retirement plan. The overall merger transaction between Temple-Inland and Gaylord was contingent upon Temple-Inland receiving at least 90% of the outstanding amount of each series of the notes, with those notes having been validly tendered and not withdrawn prior to the expiration of the offer. The merger deal was also contingent upon, among other things, Temple-Inland getting at least two-thirds of the outstanding Gaylord shares, as well as regulatory approval and the satisfaction or waiver of customary closing conditions. This transaction had not been conditioned upon financing, since Temple-Inland has received a financing commitment from Citibank, NA, to fund its offer for all outstanding Gaylord shares and the notes, as well as to satisfy the bank debt and other senior secured debt obligations, and pay costs and expenses associated with the transaction. Gaylord's Board of Directors unanimously recommended that its shareholders accept the Temple-Inland offer and tender their shares. Deutsche Banc Alex. Brown and Rothschild Inc., acted as financial advisors to Gaylord. Salomon Smith Barney Inc. (800 558-3745) was dealer/manager for Temple-Inland in connection with the tender offer for the notes. The information agent was D. F. King & Co., Inc. (bankers and brokers call 212 269-5550; all others call 800 549-6650). Computershare Trust Company was the depositary for both the share and the note tender offers.

COINSTAR INC. (CSTR) said Monday (Jan. 7) that it had completed its previously announced call of $10 million principal amount of its 13% senior subordinated discount notes. The redemption, which had originally been scheduled to take place on Dec. 31, instead occurred on Jan.3, at an 8% premium (i.e., a price of 108, or $1,080 per $1,000 principal amount). The company said that following the redemption, $50.98 million remains outstanding. AS PREVIOUSLY ANNOUNCED, Coinstar, a Bellevue, Wash.-based owner/operator of supermarket coin-counting machines, said on Dec. 3 that it had instructed the Bank of New York on Nov. 30 to call the notes on Dec. 31. As of October 1, the notes were callable at 108% of principal. The company said it believes the transaction will result in net interest expense savings of approximately $1 million annually, beginning in 2002.

PAXSON COMMUNICATIONS CORP. (PAX) was heard by syndicate sources on Monday (Jan. 7) to have sold $302.1 million of new zero-coupon/12¼% senior subordinated discount notes due 2009, with proceeds expected to be used to refinance the company's 12½% exchange debentures, which are to be issued in exchange for the existing 12½% cumulative exchangeable preferred stock. AS PREVIOUSLY ANNOUNCED, Paxson, a West Palm Beach, Fla.-based television station owner and network operator said on Jan. 2 that it would solicit consents from the holders of record (as of the close of business on Dec. 28) to amend the certificate of designation of its 12½% cumulative preferreds and the 12½% exchange debentures for which the preferred stock is exchangeable, and initially set 10 a.m. ET on Jan. 4 as the expiration deadline, which was subsequently extended to noon ET on Jan. 7. Paxson concurrently announced that it would offer $310 million of senior subordinated discount notes due 2009 (the actual note placement was somewhat smaller), with the proceeds of the note offering to be used to refinance the 12½% exchange debentures, which are to be issued in exchange for the 12½% on or about the closing date of the new debt offering. It said the consent solicitation was being undertaken to facilitate the refinancing and the offering. On Jan. 3, Paxson said that holders of a majority of the 12½% cumulative preferred shares had agreed to deliver consents to consent solicitation. Salomon Smith Barney is acting as the solicitation agent for the consent.

THE FORTRESS GROUP, INC.(FRTG) (Caa2) said Friday (Dec. 4) that its previously announced tender offer for a portion of its 13¾% senior notes due 2003 expired as scheduled on Dec. 28, without further extension. As of the expiration deadline, a total of $11.625 million of notes had been tendered at a price of $800 per $1,000 principal amount. All of the notes had been accepted for payment, with the company paying a total of $9.3 million to purchase the notes, plus accrued interest. Settlement of the transaction took place on Dec. 31. The purchase of the notes is expected to reduce the company's annual interest costs by $1.6 million. After the purchase, Fortress still had $42.6 million of the notes remaining outstanding. AS PREVIOUSLY ANNOUNCED, Forftress Group, a McLean, Va.-based diversified homebuilder, said on Nov. 21 that it had begun a "modified Dutch auction" tender offer for an initial amount of up to around $27.8 million to $33.3 million principal amount of its approximately $54.2 million of outstanding 13¾% notes. The company initially set the expiration for the offer at 11:59 p.m. on Dec. 19, which was subsequently extended. It initially said that it would buy notes for cash, at a purchase price designated by the holders of between $450 and $540 per $1,000 principal amount. Tendered notes could be withdrawn at any time prior to the deadline. Under terms of its modified Dutch auction procedure, Fortress said it would first accept offers from the noteholders to sell their notes at the minimum $450 per $1,000 principal amount price, and would then accept noteholder offers to sell the notes in order of increasing prices, until the company had spent a total of $15 million. Fortress Group said it would pay to all holders whose offers to sell notes are accepted the "clearing price" - i.e., the highest price offered for notes that it accepts for purchase, even if that price were higher than the price offered by such holder. The notes would be purchased as soon as is practicable following the expiration of the tender offer. If the total principal amount of notes offered for sale by their holders at the clearing price were to exceed the $15 million maximum amount of notes which Fortress Group intended to accept for purchase, acceptances of offers at the clearing price would be allocated among the noteholders on a pro-rata basis. Notes tendered above the eventual

clearing price would not be accepted for purchase. Tendered notes accepted for purchase would be bought by Fortress Group at the clearing price, plus accrued but unpaid interest up to the settlement date. Fortress said on Dec. 14 that none of the notes had been tendered by that date, and it said it was raising the price range at which holders could tender their notes to $700 to $800 per $1,000 principal amount. Fortress also increased the total amount it would be willing to spend on the repurchase to $16 million from $15 million originally, but cut the amount of notes it would be willing to purchase to between $20 million and $22.9 million. Fortress Group said it planned to finance its purchase of the notes with substantially all of the net proceeds of the sale of its Galloway and Sunstar divisions. Its obligation to accept notes was conditioned on the consummation of the sale of those. Banc of America Securities LLC (call 888 292-0070 toll free or 704 388-4807 collect) was the exclusive dealer manager. The Bank of New York was the depositary and the information agent was D.F. King & Co., Inc. (800 714-3305).

ADVANTICA RESTAURANT GROUP, INC. (DINE) said on Jan. 3 that it is offering to exchange up to $204.1 million of registered 12.75% senior notes due 2007 to be jointly issued by its DENNY'S HOLDINGS, INC. subsidiary and Advantica, for up to $265 million of Advantica's existing $529.6 million of 11.25% senior notes due 2008. Advantica, a Spartanburg, S.C.-based restaurant chain operator, said it will offer $770 principal amount of the new notes per $1,000 principal amount of the old notes, plus accrued and unpaid interest in cash. The offer is scheduled to expire at 5 p.m. ET on Feb. 1. Completion of the exchange offer is conditioned on a minimum amount of $160 million of the existing old notes having been validly tendered, up to a maximum tender amount of $265 million. Advantica said that in the event that the existing notes tendered exceed the maximum amount, the company will allocate the New Notes on a pro-rata basis. UBS Warburg LLC is acting as the dealer manager in the exchange offer. MacKenzie Partners, Inc. (800 322-2885) is the information agent. U.S. Bank National Association is serving as the exchange agent.

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