Level 3 retires $75 million of debt in quarter

Level 3 Communications Inc. (Caa3/CCC-) said in its earnings announcement Wednesday (Oct. 30) that it had retired approximately $75 million face amount of debt during the third quarter through cashless debt-for-equity exchanges. The company will continue to evaluate debt reduction opportunities.

AS PREVIOUSLY ANNOUNCED, Level 3, a Broomfield, Colo.- based long-haul telecommunications operator, bought back $1.7 billion face value of debt for $731 million in October 2001 under a "modified Dutch auction" procedure. In a filing with the SEC on March 19, it said that it had retired a further $195 million face amount of its debt securities by exchanging them for common stock and cash. The company gave no specific details as which bonds were retired, or on what terms, other than to say it issued 7.4 million shares of its common stock, valued at $32 million, and used $34 million of cash in the latest retirement transactions, and said that it would recognize a first-quarter gain of $130 million after transaction and debt issuance costs.

Noting that its debt and convertible securities were trading at sizable discounts to their par value, Level 3 said in its filing that it might continue to purchase its outstanding securities for cash or stock in open market or privately negotiated transactions.

Corning buys back debt during third, fourth quarters

Corning Inc. said in its earnings announcement on Wednesday (Oct. 30) that it had used $35 million in cash during the quarter to repurchase $58 million of debt. Additionally, Corning, a Corning, N.Y.-based producer of optical fiber, cable and photonic products and other high-technology products, said that it has repurchased debentures with an accreted value of $204 million for $118 million in cash in the fourth quarter through Tuesday (Oct. 29). The company said that these additional repurchases will result in Corning recording a pretax gain of $83 million in the fourth quarter. Corning said it may "from time to time" continue repurchases of its debt securities in open market or privately negotiated transactions.

Nationwide Credit again extends 10¼% '08 note exchange offer

NCI Holdings, Inc. and Nationwide Credit, Inc. (Ca) said on Wednesday (Oct. 30) that they had again extended their pending offer to exchange all of Nationwide's outstanding 10¼% senior notes due 2008 for common stock of NCI Holdings, Inc. The offer was extended to 5 p.m. ET on Thursday (Oct. 31), subject to possible extension, from the previous Oct. 30 deadline.

Nationwide said that to date, it has received tenders of senior notes from the holders of approximately 52.5% of the outstanding notes under the terms of the exchange offer - down slightly from the 52.6% reported on Oct. 25, and well down from the 71.3% that had been reported for several weeks previously.

The transaction is being handled by State Street Bank and Trust Co., the depository for the offer as well as trustee for the notes.

AS PREVIOUSLY ANNOUNCED, NCI Holdings and Nationwide Credit Inc., a Kennesaw, Ga.-based financial services company, said on July 12 that their pending exchange offer for the 10¼% notes had been extended to 5 p.m. ET on July 19. The offer had not been publicly announced previously. The company said that as of July 12, it had received tenders of senior notes from the holders of approximately 67.9% of the outstanding notes under the terms of the exchange offer. On July 19, NCI and Nationwide announced that they had again extended the exchange offer to 5 p.m. ET on July 26 from the previous July 19 deadline, and said that as of the previous deadline, they had received tenders of approximately 68.5% of the outstanding notes, up from 67.9% reported on July 12, when the offer had last been previously extended. Although the exchange offer was subsequently extended past the July 26 deadline, no public announcement was made at that time; the next announcement, on Aug. 16, again extended the exchange offer to 5 p.m. ET on Aug. 23, subject to possible further extension, and said that to date, the company had received tenders of senior notes from the holders of approximately 71.6% of the outstanding notes under the terms of the exchange offer, up from 68.5% reported on July 19.

On Aug. 23, Nationwide said it had again extended the exchange offer to 5 p.m. ET on Aug. 30, subject to possible further extension, and said that to date it has received tenders of senior notes from the holders of approximately 71.3% of the outstanding notes, down slightly from the 71.6% reported on Aug. 16. On Aug. 30 and again on Sept. 6, Sept. 13, Sept. 20 and Sept. 27, Nationwide said that it had once again extended the exchange offer, to 5 p.m. ET each on Sept. 6, Sept. 13, Sept. 20, Sept. 27 and Oct. 4, respectively, subject to possible further extension. Each time it said that to date, it had received tenders of the senior notes from the holders of approximately 71.3% of the outstanding notes, unchanged from the amount reported on Aug. 23. On Oct. 25, Nationwide again extended the offer, to Oct. 29, subject to possible further extension and said that to date, it had received tenders of senior notes from the holders of approximately 52.6% of the outstanding notes under the terms of the exchange offer - well down from the 71.3% that had been reported for several weeks previously.

Comdisco Holding to redeem some of its 11% '05 notes

Comdisco Holding Co. Inc. said Tuesday (Oct. 29) that it will make a partial redemption of $65 million of the outstanding principal amount of its 11% subordinated secured notes due 2005 (out of a current total outstanding amount of $650 million), under its mandatory redemption obligations. The notes will be redeemed at par plus accrued and unpaid interest from Aug. 12 to the redemption date. It is anticipated that the partial redemption of the notes will occur on Nov. 14.

Wells Fargo Bank will serve as the paying agent for this redemption. A notice of the redemption containing information required by the terms of the indenture governing the subordinated secured notes will be mailed to the noteholders.

AS PREVIOUSLY ANNOUNCED, Comdisco said on Oct. 9 that it would redeem the entire $400 million outstanding principal amount of its variable-rate senior secured notes due 2004 on or about Oct. 21, at par plus accrued and unpaid interest from Aug. 12 to the redemption date.

Comdisco, based in Rosemont, Ill., formerly provided equipment leasing and technology services to business customers; following its Chapter 11 bankruptcy reorganization, it emerged as a holding company whose purpose is to sell, collect or otherwise reduce to money the remaining assets of the corporation.

It said that Wells Fargo Bank would serve as the paying agent for the planned note redemption. Information about the mechanics of the redemption is contained in a notice of redemption that will be mailed to the holders of the senior notes.

Claxson again extends exchange offer for Imagen 11% '05 notes

Claxson Interactive Group Inc. said on Tuesday (Oct. 29.) that it had again extended its previously announced offer to exchange new debt for the existing 11% senior notes due 2005 of its Imagen Satelital SA subsidiary, and the related solicitation of noteholder consents.

The offer, which had been scheduled to expire at 5 p.m. on Monday (Oct. 28) will now expire at 5 p.m. on Friday (Nov. 1), subject to possible further extension. As of the old expiration deadline, Claxson said it had received tenders of approximately $71 million of the existing notes, or 89%of the outstanding amount, well up from the approximately $12.8 million of the notes which had been tendered as of the previous extension announcement, back on Oct. 15.

Claxson said it had extended the exchange offer to allow bondholders who had not yet participated additional time to accept the previously announced offer. It warned that "any bondholder who does not participate in the Exchange Offer will not be offered any type of separate transaction on improved economic terms." It also warned that Imagen will not make any past due interest payments, and will not pay the upcoming Nov. 1 interest payment on the outstanding notes.

D.F. King & Co. (contact Tom Long at 212 493-6920) is the information agent for the exchange. Banco Rio de la Plata (contact Eduardo Rodriguez Sapey at 011 5411 4341 1013 in Buenos Aires) is the Argentina Trustee and Rep. Exchange Agent.

AS PREVIOUSLY ANNOUNCED, Claxson, a Buenos Aires, Argentina-based multimedia company providing branded Spanish- and Portuguese-language entertainment content, said on June 28 that it had begun an exchange offer and related consent solicitation for all $80 million of Imagen's 11% notes, under which it would offer $410 of its new 7.25% senior notes due 2010 per $1,000 principal amount of the existing Imagen notes (the amount of new notes and their interest rate were both subsequently increased). Claxson also said that it was soliciting proxies from holders of the existing notes to vote in favor of the proposed amendments to the notes' indenture, and was offering a consent payment equal to $10 per $1,000 principal amount (which was subsequently raised) to holders of the existing notes tendering them by the original consent payment deadline of 5 p.m. ET on July 18, although this was subsequently extended. Claxson initially set 5 p.m. ET on July 31 as the exchange offer expiration deadline, although this also was subsequently extended. It said the exchange offer would be conditioned upon the receipt of tenders of at least 95% of the outstanding principal amount of the existing Imagen notes, as well as the approval by the Argentine government Comision de Valores of the public offering of the newly issued notes in Argentina, as well as other customary conditions. Claxson said that the new notes would not be registered for unlimited public trading under the U.S. Securities Act of 1933, as amended, and would only be offered in the U.S. to qualified institutional buyers and accredited investors in private transactions and to persons outside the Unites States in off-shore transactions, as defined by the Act. The new notes will be listed on the Buenos Aires Stock Exchange.

Claxson subsequently extended the exchange offer several times over the following weeks, as it continued discussions with its noteholders aimed at getting full participation, and it also extended the consent deadline as well so that it would coincide with the offer expiration date.

On Sept. 3, Claxson announced that it had again extended the offer, to 5 p.m. ET on Sept. 16, subject to possible further extension, from the previous deadline of Aug. 30. It said that as of 5 p.m. ET on Aug. 30, it had received tenders from holders of approximately $8.1 million principal amount of the outstanding Imagen existing notes, unchanged from the amount which had been exchanged from Aug. 28, as outlined in its previous extension announcement. Claxson also said that it had increased the compensation it was offering to $500 of its new senior notes due 2010 per $1,000 principal amount of the existing notes, and had also increased the interest rate on the proposed new notes by 100 basis points, from the originally announced 7.25% to 8.25%. In addition, Claxson increased the consent payment to $15 per $1,000 principal amount of the old notes, payable to all holders tendering their notes by the new expiration date. Claxson furthermore said that it had provided that Imagen will unconditionally and irrevocably guarantee on a senior basis all the interest and principal payments on the new notes. It said that any 11% noteholder who had previously tendered their existing notes would automatically be eligible to receive all of the new and improved terms without taking any action.

After again extending the exchange offer on Sept. 17 so that it would now expire at 5 p.m. ET on Sept. 24, subject to possible further extension, Claxson said on Sept. 24, that it had again amended the offer, raising the interest rate on the proposed new notes by 50 basis points to 8.75%, increasing the consent payment to US$18.75 per US$1,000 principal amount of existing notes tendered, increasing the extraordinary cash payments on the new notes, and also now providing for the amortization of principal beginning in 2006. Claxson said it had fully outlined the changes in the offer in a new supplement to the official Offering Memorandum dated Sept. 24. It said that any holder who had previously tendered their existing notes would be automatically eligible to receive all of the new and improved terms of the exchange offer. Claxson also again extended the expiration date of the offer to 5 p.m. ET on Oct. 8 from the previous Sept. 24 deadline, subject to possible further extension, and said that as of 5 p.m. ET on Sept. 24, the company had received tenders from holders of approximately $12.8 million of the existing notes, up slightly from the US$12.7 million that had been received from the holders as of Sept. 16, as outlined in its previous extension announcement.

After again extending the offer on Oct. 9, to 5 p.m. ET on Oct. 11, subject to possible further extension, Claxson said on Oct. 15 that it had again amended and extended its offer, raising the principal amount of new notes it would offer per $1,000 principal amount of existing notes to $555 (from $500 previously) and had increased the consent payment to $30 per $1,000 principal amount of old notes (up from $18.75 previously) , payable to all holders tendering their existing notes be the new exchange deadline of 5 p.m. ET on Monday (Oct. 28), subject to possible further extension. As of the prior deadline, at 5 p.m. ET on Oct. 11, Claxson had received tenders from holders of approximately $12.8 million principal amount of the old notes, unchanged from the previously reported tendered amount.

Claxson said that any noteholder who had previously tendered their old notes would automatically be eligible to receive all of the new and improved terms of exchange offer. It said that it had reached an agreement on the economic terms of the exchange offer with a group of non-tendering holders representing approximately 80% of the outstanding principal amount of the existing notes. Accordingly, Claxson said it had also increased the minimum participation threshold to 93% from the previous 66 2/3%. It said that based on the agreement reached with these noteholders, and including the 16% of the notes that had previously been tendered, the company expected to reach the new minimum participation threshold.

Pennzoil-Quaker State sets consideration for bond tender offers

Pennzoil-Quaker State Co. said on Monday (Oct. 28) that it had set the total purchase prices for its previously announced offers to purchase all of the outstanding $100 million of 6 5/8% notes due 2005; the $200 million of 6 ¾% notes due 2009; the $400 million of 7 3/8% debentures due 2029; and the $250 million of 10% Series B senior notes due 2005, based on the yields of the respective reference securities at 2 p.m. ET on Monday.

It set the total purchase price for the 6 5/8% notes at $1,112.36 per $1,000 principal amount of notes validly tendered and accepted for purchase. It set the total purchase price for the 6 ¾% notes at $1,160.99 per $1,000 principal amount. It set the total purchase price for the 7 3/8% debentures at $1,231.02 per $1,000 principal amount. And it set the total purchase price for the 10% notes at $1,010 per $1,000 principal amount. The company also said that in addition to the respective total purchase prices, it would would pay accrued and unpaid interest up to, but not including, the applicable settlement date, which is expected to be Friday (Nov. 1).

Merrill Lynch & Co. is the exclusive Dealer Manager for the offers and the consent solicitations (call toll-free at 888 ML4-TNDR, or at 212 449-4914). Mellon Investor Services LLC is the information agent (call 888 585-5314; bankers and brokers call collect at 917 320-6286).

AS PREVIOUSLY ANNOUNCED, Pennzoil-Quaker State, a Houston-based petroleum products producer which became a wholly owned subsidiary of Shell Oil Co. (the U.S. arm of international energy giant Royal Dutch Shell Group) on Oct. 1, said on Oct. 2 that it had begun tender offers for the debt, as well as related solicitation of noteholder consents to certain amendments to each of the notes' respective indentures. Pennzoil said that in addition to the tender offer for its 10% notes, it was providing two additional offers for the holders of those notes, but it said that 10% noteholders could tender their securities under only one of the three offers.

Pennzoil-Quaker State initially said each of the tender offers as well as the alternative offer and the change-of-control offer for the 10% notes would expire at midnight ET on Oct. 30 (the expiration date on all three of the 10% note offers was subsequently extended to Oct. 31, while the deadline on the other three note offers remained Oct. 30). It set 5 p.m. ET on Oct. 16 as the consent deadline for each of the offers, by which time notes must have been tendered in order to receive the applicable consent payment as part of the total consideration. All deadlines are subject to possible extension.

Pennzoil said it would set the total purchase price which it will pay for the notes via a formula based upon a fixed spread over the yield to maturity of the respective reference security for each of the note series being tendered for at 2 p.m. ET on the second business day before the expiration of the tender offers (the notes were actually priced on that date, Oct. 28). Pennzoil said it would determine the price it will pay for the 6 5/8% notes based on a 30-basis point fixed spread over the yield of the 5 7/8% U.S. Treasury Note due Nov. 15, 2005. It would determine the price for the 6¾% notes based on a 35-basis point fixed spread over the yield of the 5½% U.S. Treasury Note due May 15, 2009. It would determine the price for the 7 3/8% debentures based on a 55-basis point fixed spread over the yield of the 5 3/8% U.S. Treasury Note due Feb. 15, 2031. And it would determine the price for the 10% notes based on a 30-basis point fixed spread over the yield on the 5 7/8% U.S. Treasury Note due Nov. 15, 2005. For the 10% notes only, the price would be determined based on the sum of (x) 35% of the equity offering redemption price (equal to 110% of the principal amount of 10% notes validly tendered, and (y) 65% of the fixed spread price for the 10% notes. The total purchase price for each series of notes would include a consent payment of 3% (i.e. $30 per $1,000 principal amount of notes tendered), which will be paid only to holders who have tendered their notes by the consent deadline; holders tendering after that deadline will receive the total purchase price minus the consent payment. Pennzoil will also pay accrued and unpaid interest on validly tendered and accepted notes up to - but not including - the settlement date, which is expected to be two business days after the expiration date (tentatively, the settlement date will be Friday, Nov. 1).

Concurrently with each tender offer, Pennzoil is soliciting noteholders' consents to certain amendments to the notes' indenture that will eliminate most of the applicable restrictive covenants. For each series of notes, adoption of the amendments requires the consent of holders of not less than a majority in outstanding principal amount of that series of notes. In the case of the 6 5/8% ONLY, a holder cannot deliver a consent, and therefore cannot tender such 6 5/8% notes unless it either was the registered owner of such 6 5/8% notes as of the close of business on Oct. 1, or unless it obtains a proxy from the registered owner as of that record date. Each tender offer and consent solicitation is conditioned upon, among other things, the receipt of the consent of holders of not less than a majority in outstanding principal amount for the applicable series of notes.

In addition to the tender offer, Pennzoil is offering to purchase for cash any and all of the 10% notes at a price equal to 101% of their par value ($1,010 per $1,000, of the principal amount of 10% notes validly tendered) as a change-of-control offer, as stipulated by the notes' indenture. That change-of-control offer was triggered by the acquisition of Pennzoil by Shell. Consummation of the 10% note change-of-control offer is unconditional.

Pennzoil is also making an alternative offer to the holders of the 10% notes, under which it is offering to purchase for cash any and all of the 10% notes on the 10% note tender offer terms, as outlined above IF the conditions precedent to the completion of the 10% note tender offer ARE satisfied when the offer expires. It said that IF such conditions ARE NOT satisfied at such time, 10% notes tendered pursuant to the 10% note alternative offer will be purchased at the 10% note change-of-control purchase price. Consummation of the 10% note alternative offer is unconditional.

Cede & Co., the nominee of The Depository Trust Co., is the r egistered holder of all the notes subject to the offers. Beneficial holders wishing to tender their notes must instruct the participant in DTC through which they hold such notes to tender such notes on their behalf.

On Oct. 17, Pennzoil-Quaker State said that it was extending the expiration deadline on the 10% notes tender offer, the change of control offer for the 10% notes and the alternative offer for the 10% notes to 5 p.m. ET on Oct. 31, subject to possible further extension, from the previous Oct. 30 deadline. The deadline for the other three note offers remains Oct. 30, subject to possible extension.

The company also said that Pennzoil said its 10% note tender offer and the 10% note alternative offer were amended and now are conditioned on the valid tender and delivery of consents to 90% of those notes.

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