Resolute Forest obtains needed consents for $501 million 10¼% notes

By Jennifer Chiou

New York, May 7 - Resolute Forest Products Inc. announced the receipt of early tenders and consents from holders of $496.5 million, or 99.1%, of its $501 million outstanding principal amount of 10¼% senior secured notes due 2018.

The company took in enough consents to enter into a supplemental indenture.

As reported, Resolute is soliciting consents to amend the notes to eliminate substantially all the restrictive covenants and events of default and to release all the collateral securing the notes.

The total purchase price will be $1,166.94 for each $1,000 principal amount of notes tendered by 5 p.m. ET on May 7, the early tender deadline. The total payment includes an early tender premium of $30.00 per $1,000 principal amount.

Those who tender after the early deadline will receive the total payment less the early premium.

The tender offer and consent solicitation will end at midnight ET on May 21.

Pricing was set using a rate equal to the U.S. Treasury rate to the first call date or the special redemption date plus 50 basis points.

The total payment was set based on a settlement date of May 8, the initial settlement date, using a weighted average that assumes: (i) $416.2 million of the 2018 notes would be repurchased at a price based on the present value of the 2018 notes' remaining cash flows through the redemption date of Oct. 15, 2014, the first call date, including the redemption price of $1,051.25 minus accrued interest to but excluding the initial settlement date and (ii) $85 million of the notes would be repurchased at a price based on the remaining cash flows through the redemption date of Oct. 4, 2013, the special redemption date, including the redemption price of $1,030.00, minus accrued interest to but excluding the initial settlement date.

The company also will pay accrued interest up to but excluding the settlement date of May 8 for early tendered notes and promptly after the offer ends for remaining tenders.

The note terms allow Resolute to redeem during each 12-month period from Oct. 4, 2010 to Oct. 15, 2013 up to 10% of the original aggregate principal amount of notes, or $85 million principal amount, at a redemption price of 103% of par plus accrued interest to the redemption date, the release noted.

Accordingly, if a holder does not tender notes in the offer, the notes may be redeemed at 103 plus accrued interest.

The company previously said it had to obtain consents from holders of a majority of the outstanding notes in order to amend the notes and from at least 66 2/3% of the outstanding notes to approve the collateral release.

Holders must provide consents in order to tender their notes and may not revoke consents without withdrawing their tendered notes.

The tender offer and the consent solicitation are conditioned on tenders for at least two-thirds of the outstanding notes and enough proceeds from refinancing to fund the offer.

Global Bondholder Services Corp. (866 873-7700 or 212 723-6106) is the information agent. BofA Merrill Lynch (888 292-0070 or 980 388-4813), Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106) and BMO Capital Markets Corp. (212 702-1191) are the dealer managers.

Resolute Forest is a Montreal-based pulp and paper manufacturer. It launched the offer on April 24.

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