Celestica completes redemption of 10 ½% ' 06 notes

Celestica Inc. said on Wednesday (Aug. 21) that it had completed the previously announced redemption of its remaining outstanding 10½% senior subordinated notes due 2006. Concurrently, Moody's Investors Service, which had rated the notes at Ba3, withdrew its rating on the issue.

AS PREVIOUSLY ANNOUNCED, Celestica, a Toronto-based electronic components designer and manufacturer, said on July 17 that it would redeem all of the remaining US$130 million of outstanding 10½% notes (out of the US$200 million originally issued in November, 1996) at a redemption price of 105.25% of the principal amount (i.e., US$1,052.50 per US$1,000 principal amount), plus accrued and unpaid interest up to the redemption date. Celestica did not announce a specific redemption date, other than saying that it expected that the redemption date would occur prior to the end of the third quarter. Celestica said it would finance the redemption out of the company's existing cash resources.

Viskase begins exchange offer for 10¼% '01 notes

Viskase Cos. Inc. said in a Securities and Exchange Commission filing on Tuesday (Aug. 20) that it was beginning an offer to exchange new debt and preferred shares for its outstanding 10¼% senior notes which came due on Dec. 1, 2001 (but which were not repaid at that time), under a previously announced restructuring agreement with an ad hoc committee representing the holders of a majority of the notes. The exchange offer, on the previously announced terms, will expire at 5 p.m. ET on Sept. 19, subject to possible extension, and already tendered notes can be withdrawn any time up till then. Viskase said that if fewer than all of the existing notes are tendered, but at least two-thirds of the outstanding principal amount of the notes are tendered by a majority in number of the holders of all of the notes, it must then aempt to effect a prepackaged plan of reorganization under the Bankruptcy Code which would be substantially similar in economic effect to the exchange offer. Viskase said it was also soliciting noteholder consents to that plan concurrently with the exchange offer. Wells Fargo Bank Minnesota, National Association, is the exchange agent for the offer. Morrow & Co. Inc. Is the information agent.

AS PREVIOUSLY ANNOUNCED, Viskase, a Willowbrook, Ill.-based maker of cellulose sausage casings and other food packaging materials, said on July 16 that it had executed a restructuring agreement with the ad hoc committee of holders of its 10¼% notes regarding the restructuring of those notes. Under the terms of the proposed restructuring, the company's wholly owned operating subsidiary, Viskase Corp. would be merged with and into Viskase Cos. Inc., which would be the surviving corporate entity. The outstanding senior notes would be exchanged for new 8% senior secured notes due 2008 and shares of Series A preferred stock, to be issued by the restructured company on a basis of $367.96271 principal amount of the new notes (i.e., a total of $60 million) and 126.82448 shares of preferred stock (i.e., a total of 20,680,000 shares or 94% of the preferred stock) for each $1,000 principal amount of the existing senior notes.

Viskase said that the $60 million of new notes would pay interest semi-annually (except annually with respect to year four and quarterly with respect to year five), with interest payable in principal amount of new notes (i.e. pay-in-kind) for the first three years. Interest for years four and five would be payable in cash to the extent of available cash flow, as defined, and the balance in principal amount of new notes. After that, the interest would be payable in cash. The new notes would be secured by a first lien on the assets of the company, post-merger, and would be subject to subordination of up to $25 million for a secured working capital credit facility for the company.

It also said that the new Series A preferred shares would pay a 6% cumulative dividend. Its holders would vote on an as-converted basis on all matters together with Viskase's common stockholders. The preferred shares would also have a liquidation preference of $5 per share and be convertible into common stock at any time at a price of 20 cents per share. Upon conversion, the preferred shares would represent about 97% of the common stock. Accrued but unpaid dividends, at time of conversion, would be convertible into common stock upon the same basis. At Viskase's option, the preferred shares would be automatically converted into common stock on the same basis in connection with a public offering of securities by the company of not less than $50 million. Preferred stock dividends would be payable in cash to the extent that Viskase is legally, contractually and financially able to pay dividends.

The proposed exchange offer would be subject to acceptance by holders of 100% of the outstanding senior notes, unless that requirement is waived by Viskase and the waiver id approved by the Ad Hoc Committee of current noteholders. The Committee members, collectively holding approximately 54% of the senior notes, agreed to accept the proposed exchange offer. The exchange offer would include a solicitation for a Chapter 11 plan for the company. If less than 100% of the outstanding senior notes were to accept the exchange offer but sufficient senior notes were to be exchanged to satisfy the voting requirements for acceptance of a Chapter 11 plan, the company would commence a voluntary Chapter 11 proceeding and submit a Chapter 11 plan containing substantially the terms set forth in the exchange offer. In the event the exchange offer is consummated through a bankruptcy proceeding, the company's current common stock would be canceled and new common stock would be issued, with 94% going to the current senior noteholders and the remaining 6% to the company's management. Holders of old common stock would meantime receive warrants to purchase shares of new common stock equal to 2.7% of the company's common stock. Assuming all warrants are exercised, holders of the senior notes would receive approximately 91.5% of the new common stock and approximately 5.8% would go to the company's management. Thus, the consideration received by all noteholders would be substantially the same regardless of whether the proposed restructuring occurs via an exchange offer or a prepackaged Chapter 11 plan.

Viskase further said that upon completion of the proposed restructuring, the company's board of directors would be reconstituted to consist of five members, including the Company's Chief Executive Officer and four other persons designated by the ad hoc committee of current senior noteholders.

The members of the ad hoc committee have agreed to support the proposed restructuring, including exchanging their senior notes and taking such other reasonable actions as necessary to consummate the proposed restructuring. In addition, the members of the ad hoc committee have agreed not to transfer (other than to another member of the ad hoc committee or an affiliate of a member) their shares of the new preferred stock for a period of two years after the exchange offer is completed, and for a period of one year thereafter, the company would have a right of first refusal to either purchase or designate a purchaser for shares of preferred stock to be transferred by a member of the ad hoc committee to a person other than another member of the ad hoc committee or their affiliates.

Doe Run again extends exchange, cash tender offers

The Doe Run Resources Corp. (Ca/D) said on Wednesday (Aug. 21) that it is again extending the expiration time of its previously announced offers to exchange new notes plus a cash accrued interest payment for its outstanding 11¼% series B senior secured notes due 2005, its outstanding 11¼% series B senior notes due 2005 (C/D) and its outstanding series B floating interest rate notes due 2003, its previously announced concurrent cash tender off for those three series of notes and the previously announced related solicitation of noteholder consents to proposed changes in the indentures governing those notes. Those offers were extended to 5 p.m. ET on Aug. 23, subject to possible further extension, from the previous Aug. 20 deadline.

The company said that although it has received tenders of notes sufficient to satisfy the previously announced minimum tender conditions required for the consummation of the offers, with holders of 95% of the aggregate principal amount of its outstanding notes having participated, it is nonetheless extending the offers to allow it to finalize the terms of its Amended and Restated U.S. Revolving Credit Facility with its working capital lenders and to continue efforts to satisfy conditions required for the consummation of the offers. Doe Run said it has reached a tentative agreement with the working capital lenders and is working with those lenders to complete the required definitive documentation.

AS PREVIOUSLY ANNOUNCED: On April 15, The Doe Run Resources Corp, a St. Louis-based metals smelting company, announced that it had reached an agreement in principle with its corporate parent, New York-based industrial conglomerate The Renco Group, Inc. and with Regiment Capital Advisors, LLC, under which Renco and Regiment would provide Doe Run with significant capital that would enable Doe Run to restructure its existing debt. Under that agreement in principle, Renco said it would purchase $20 million of Doe Run preferred stock and Regiment - already a significant holder of Doe Run's 11¼% senior and senior secured notes and its floating interest rate notes - said it would commit to lend Doe Run $35 million, and would offer other holders of Doe Run notes the opportunity to participate in making such loan. Doe Run said it planned to make a cash tender offer for a portion of its notes, and an exchange offer for the balance of the notes. The $55 million in proceeds of the Renco investment and the Regiment loan would be used to finance the cash tender offer, to pay the accrued interest as of March 15 on the notes that would be exchanged in the exchange offer, and to pay certain costs of those transactions. Doe Run said that if they were successful, the cash tender offer and the exchange offer would significantly reduce its outstanding debt. Doe Run would meanwhile be able to continue to operate all its facilities at present levels and Doe Run's trade creditors would not be adversely affected.

Besides the $20 million investment, Renco would also provide Doe Run with credit support of up to $10 million, if necessary, to provide additional working capital. Doe Run said the non-binding agreement in principle would be subject to agreement on the terms of definitive documentation and further said that the successful completion of the planned transactions would be subject to several conditions, including, among others, the participation by holders of 90% of the principal amount of each class of notes in the cash tender offer and/or the exchange offer (Doe Run originally issued $200 million of the 11¼% senior notes, $50 million of the 11¼% senior secured notes and $55 million of the floating rate notes). It would also be conditioned upon the satisfactory modification of Doe Run's U.S. and Peruvian revolving credit facilities. Doe Run said it anticipates the completion of definitive documentation for the Regiment loan and the Renco investment within 30 days of its press release, at which time more detailed terms would be announced and the cash tender offer and exchange offer would be commenced.

On May 16, Doe Run outlined the terms of the agreement in principal and announced its tender offer and exchange offer for the notes in an 8-K filing with the Securities and Exchange Commission. The company did not initially disclose expiration deadlines for either offer nor did it disclose deadlines for the related consent solicitations. Doe Run said that under the terms of its exchange offer, it would offer the holders of its outstanding 11¼% senior secured notes $770 per $1,000 principal amount of the notes in new Doe Run 11¼% exchange notes due 2007, plus a cash payment of $56.25 per $1,000 principal amount equal to the amount of accrued and unpaid interest through March 15. It would offer the holders of its existing 11¼% senior notes $670 per $1,000 principal amount of the notes in new exchange notes, plus the $56.25 per $1,000 principal amount interest payment, and it would offer the holders of the existing floating-rate notes $670 per $1,000 principal amount of the notes in new exchange notes, plus an accrued interest payment of $46.90 per $1,000 principal amount. Doe Run said the exchange offer would be open only to those holders who could reasonably be defined as Accredited Investors under Rule 501(a) of the Securities Act of 1933. Doe Run said that simultaneously with the exchange offer, it would begin a cash tender offer for the outstanding notes, under which it would offer to buy the notes at a price between $250 and $350 per $1,000 principal amount. Doe Run said that it would select as the cash payment the highest price specified by any noteholder that would enable the company to purchase the maximum amount of notes while not exceeding its target aggregate purchase price of $44 million. Doe Run said it would pay the same cash payment for all of the notes validly tendered at or below that cash payment price and not subsequently withdrawn, upon the closing of the transaction. It said that holders whose notes were accepted for purchase under the cash tender offer would not be eligible to receive any interest payment on them above the cash payment price. Any holder tendering notes under the cash tender offer would also be considered to have tendered them under the exchange offer as well. Should the amount of notes tendered under the cash tender offer and not subsequently withdrawn exceed the amount that the company would be able to buy and still stay within its available cash aggregate purchase price of $44 million, Doe Run would first accept for payment all notes tendered below that cash payment price and would then accept notes tendered at the cash payment price on a pro-rata basis. Any notes thus tendered under the cash tender offer which could not be purchased for cash would then be exchanged for the appropriate amount of new exchange notes and the appropriate cash interest payment. Doe Run said that should a holder choose to neither tender his existing notes under the exchange offer nor the cash tender offer, it reserves the right to leave such unexchanged or unpurchased notes outstanding upon the conclusion of its offers; it also, however, reserves the right (but is under no obligation) to subsequently purchase such notes as permitted under the terms of its new senior credit facility either on the open market or in negotiated transactions, either for similar or for different consideration as it is offering under the exchange offer and the cash tender offer. It also reserves the right to defease the remaining outstanding notes or to redeem them under the terms of their indentures. Any remaining outstanding notes will be subject to indenture changes for which Doe Run is seeking noteholder consent concurrently with its exchange and cash tender offers. Doe Run said the tender of notes under either the exchange offer or the cash tender offer would be considered to constitute noteholder consent to the proposed indenture amendments, which would eliminate substantially all of the restrictive operating and financial covenants in the indentures, and which would modify a number of the "event of default" provisions, and various other provisions currently contained in the existing notes' indentures.

Doe Run also said that in connection with the offers, it would enter into a new $37.5 million, four-year senior secured credit facility with Regiment Capital Advisors, and that it would offer noteholders who initially elect to participate in the exchange offer the opportunity to participate as co-lenders under the New Senior Credit Facility on a pro-rata basis, based upon those noteholders' respective interests in the existing notes initially tendered in the exchange offer. The participation of the noteholders as co-lenders will be subject to Regiment's right, in its sole and absolute discretion, to lend at least 60% of the aggregate principal amount of the Initial Senior Loan. Each noteholder who elects to participate in the Initial Senior Loan will also participate as a co-lender in any subsequent senior loan approved by Doe Run's existing lenders on a pro- rata basis, in accordance with such noteholder's percentage interest in the Initial Senior Loan. The proceeds of the Initial Senior Loan will be used to consummate the exchange offer and the cash tender offer. Noteholders choosing to participate in the Initial Senior Loan will receive warrants exercisable for up to 20% of the fully diluted common stock of Doe Run, at an initial total exercise price of $2,000,000. The warrants would be distributed to the participating noteholders on a pro-rata basis in accordance with such participant's interest in the Initial Senior Loan. Doe Run said that consummation of the cash tender offer and the exchange offer, as well as related transactions, would be conditioned upon a number of conditions including - but not limited to - the valid tender (without subsequent withdrawal) of at least $125 million total principal amount of the existing notes under the cash tender offer; the participation by 90% of the outstanding principal amount of each of the three series of existing notes in the exchange offer and/or the cash tender offer; and the receipt of the requisite consents to the proposed indenture changes. Doe Run said it expected to launch the tender offer and exchange offer by the last week of May, and warned that there could be no assurance that it would be able to successfully complete the transactions described.

On June 6, Doe Run said in an SEC filing that it had begun an offer to exchange new notes plus a cash accrued interest payment for its outstanding 11¼% senior and senior secured notes due 2005, and its outstanding floating interest rate notes due 2003; had begun a concurrent cash tender off for those three series of notes; and had begun a related solicitation of noteholder consents to proposed changes in the indentures governing those notes. Doe Run said it was also offering noteholders choosing to participate in the exchange offer the option of also participating in its new senior credit facility as co-lenders. It outlined terms of the offers that were the same as those which Doe Run had already outlined in a previous SEC filing. In its latest filing, the company also said that the exchange offer, the cash tender offer and the right of participation in the senior loan would each expire at 5 p.m. ET on July 9, subject to possible extension. Tendered notes could be withdrawn at any time prior to the expiration date.

On July 9, Doe Run extended the pending exchange offer, the cash tender offer and the consent solicitation to 5 p.m. ET on July 19, and said that it was providing updated projected financial information. The company further reported that it had been engaged in "constructive discussions" with holders of a "significant amount" of its notes, and said it was extending the expiration time of the offers and providing the updated projected financial information "as an aid to further discussion of the Offers."

On July 19, Doe Run said that it had further extended its exchange offer for its 11¼% senior and senior secured notes due 2005 and its Series B floating interest rate notes due 2003, its concurrent cash tender off for those three series of notes and solicitation of noteholder consents to 5 p.m. ET on Aug. 2, subject to possible further extension, from the previous July 19 deadline. The company also amended the terms of the aforementioned offers to - among other things - allow its noteholders the ability to elect to participate in a third offer, "the Exchange/Loan Offer," in addition to participating in the previously described cash tender offer or exchange offer. It said that holders who participate in this "Exchange/Loan

Offer" will be able to exchange their notes for a participation interest in the Initial Senior Loan which the company, as previously announced, is entering into as part of its overall recapitalization. Doe Run said that it was extending the expiration time of the offers to allow noteholders to consider participating in such an additional offer. Doe Run also said it was amending the terms of the exchange notes which noteholders could elect to receive as part of either the exchange offer or the newly announced "Exchange/Loan Offer" to include, among other things, the provision of a required 1% per annum cash interest payment on each of the first two interest payment dates (as opposed to the previously outlined provision contained in the "Description of Exchange Notes" found in the official Offering Memorandum, which indicated that such interest payments could be paid in full "in kind" (i.e., through the issuance of additional notes, with no cash component). Doe Run further announced that in addition to the inclusion of the new "Exchange/Loan Offer," it has amended the previously outlined terms of its "New Senior Credit Facility" (including the "Subsequent Senior Loan Participation") and its exchange notes to be issued to holders of its current notes successfully participating in the exchange offer. Doe Run said that as amended, the New Senior Credit Facility will consist of the "Initial Senior Loan" in the amount of $35.7 million and a Subsequent Senior Loan in the amount of $25 million, $10 million of which will be committed by Regiment Capital Advisors, LLC at closing to provide Doe Run with additional working capital under certain circumstances in the future. The balance of the Subsequent Senior Loan is to be funded at the request of Doe Run subject to the consent of the lenders. The Renco Group, Inc., ultimate parent of Doe Run, has agreed to take a participation interest in $5 million of the aforementioned $10 million "Regiment Credit Support." Holders of Doe Run's currently outstanding notes who participate in the Initial Senior Loan will have the option - but not the obligation - to participate in the Subsequent Senior Loan. Noteholders who have already tendered their notes into the cash tender offer or the exchange offer will have the right to withdraw or amend such tenders; noteholders who wish to tender their notes into the new "Exchange/Loan Offer" must transmit a completed Letter of Transmittal for such offer to the depositary and exchange agent for the offers.

On Aug. 2, Doe Run said that it had extended the exchange offer, the concurrent cash tender offer and the related consent solicitation to 5 p.m. ET on Aug. 6 from the previous Aug. 2 deadline. Doe Run also said that it has received "overwhelming support" for the offers from holders of all three categories of notes. Doe Run said that although, to the best of its knowledge, holders of approximately 95% of Doe Run's aggregate principal amount of notes outstanding had chosen to participate in the offers, as of the old deadline, approximately 86% of the floating rate notes had been tendered for participation in the offers, still less than the 90% minimum tender required for consummation of the offers; therefore, the company said it was extending the expiration time of the offers in order to continue discussions with John Hancock Funds, Triton Partners LLC and Hawkeye Capital, LP concerning the participation by those entities with respect to the floating-rate notes which those companies hold. Doe Run cautioned that there could be "no assurance that [it] will be able to consummate the Offers successfully."

On Aug. 7, Doe Run said that it had extended its exchange offer, the concurrent cash tender offer and the related consent solicitation to 5 p.m. ET on Aug. 14 from the previous Aug. 6 deadline. Doe Run also said that it was amending the minimum tender condition with respect to the 2003 floating-rate notes, reducing it to 86% from 90% previously. The minimum tender conditions for the other two series of notes - which had previously been achieved - remains 90%. With the amendment regarding the floating-rate notes, Doe Run said the minimum tender required for the consummation of the offers had now been achieved.

On Aug. 14, Doe Run said that it was again extending its offers to 5 p.m. ET on Aug. 20, subject to possible further extension, from the previous Aug. 14 deadline. The company said that although it had already received tenders of notes sufficient to satisfy the previously announced minimum tender conditions required for the consummation of the offers, with holders of 95% of the aggregate principal amount of its outstanding notes having participated, it was nonetheless extending the offers to allow it to continue discussions with its working capital lenders regarding the terms of its Amended and Restated U.S. Revolving Credit Facility. State Street Bank and Trust Co. in Boston (call 617 662-1548 or fax documents to 617 662-1452) is the exchange agent and the depositary for the offers. MacKenzie Partners, Inc. (call 212 929-5500 or, toll-free, 800 322-2885) is the information agent.

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