Central European Media lays out plans to retire €272.97 million 11 5/8% notes; consents needed

By Susanna Moon

Chicago, Feb. 28 - Central European Media Enterprises Ltd. said it plans to redeem its €272,972,000 principal amount of 11 5/8% senior notes due 2016 with proceeds of a rights offering.

The company also announced a consent solicitation under a subsidiary's 9% senior secured notes due 2017 to allow debt to be incurred under the refinancing plans.

In connection with the rights offering, holders of class A common stock and preferred stock will receive rights to purchase an aggregate of 3,391,403 units at a subscription price of $100.00 per unit.

Each unit will consist of a 15% senior secured note due 2017 at par of $100 and 21.167376 unit warrants exercisable at $1.00 per share.

Time Warner has agreed to purchase all units in the rights offering not subscribed for by other shareholders, the company noted. In addition, Time Warner will purchase 576,968 units in a separate private placement to close with the rights offering.

Proceeds of the rights offering and the purchase of units by Time Warner of will be about $396.8 million, which is equal to the amount of principal and early redemption premium payable to redeem the 2016 notes, according to a company press release.

Term loan

If the rights offering has closed by May 29, Time Warner would fund a $30 million loan due Dec. 1, 2017 to the company at closing of the rights offering. The loan would be funded with a term loan facility to be closed on Feb. 28.

If the rights offering has not closed by that date, Time Warner will use the term loan proceeds to loan the amount required to redeem the 2016 notes plus an additional $30 million, all of which will initially mature on Sept. 8, 2014.

If the rights offering closes between May 29 and Sept. 8, proceeds of the rights offering will be used to repay some of the term loan used to redeem the 2016 notes, and the maturity date of the remaining portion of the term loan will be extended to Dec. 1, 2017.

If the rights offering has not closed by Sept. 8, the company will issue to Time Warner warrants to purchase 84 million shares of class A common stock, which equal the number of unit warrants that otherwise would have been issued in the rights offering and Time Warner private placement. Upon the issuance of such warrants, the maturity date of the term loan facility will be extended to Dec. 1, 2017.

In addition, Time Warner will provide to the company a $115 million senior secured revolving credit facility at the earlier of the closing of the rights offering and the funding of the term loan.

The issuance of the new notes and the incurrence of debt under the term loan and revolving credit facilities require consents from holders of the 9% senior secured notes due 2017 issued by the company's wholly owned subsidiary CET 21 spol s ro.

Solicitation for 9% notes

Central European Media's Czech Subsidiary CET 21 began a consent solicitation for its 9% senior secured notes due 2017.

The company is seeking consents to enhance the liquidity and operating cash flow of Central European Media and its restricted subsidiaries, including CET 21, by substituting cash pay debt with non-cash pay debt, according to a separate press release.

The consent solicitation will end at 5 p.m. ET on March 11.

The consent fee will be €2.50 in cash per €1,000 principal amount of notes.

The company needs to obtain consents from the holders of at least a majority amount of the outstanding notes for the solicitation.

Citigroup Global Markets Inc. (212 723-6106 or +44 0 20 7986 8969) is the solicitation agent for the consent solicitation. Global Bondholder Services Corp. (212 430-3774) is the information agent.

The company provides programming in Eastern European countries, including the Czech Republic, Bulgaria, Romania, Slovakia, Slovenia and Croatia.

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