Petco tendering for portion of 10¾% notes

New York, Dec. 22 - Petco Animal Supplies, Inc. (B2/B) said that it had begun a modified Dutch auction tender offer for up to $50 million principal amount of its $170 million of outstanding 10¾% senior subordinated notes due 2011.

It set midnight ET on Jan. 22 as the expiration deadline, subject to possible extension.

Petco, a San Diego-based specialty retailer of premium pet food and other pet supplies, said that it is offering to purchase the notes for cash at a purchase price of between $1,180 and $1,200 per $1,000 principal amount of notes tendered, plus accrued and unpaid interest up to, but not including, the date of purchase.

The final purchase price is to be determined via the modified Dutch auction procedure. Petco will accept tenders in the order of lowest to highest tender prices specified by tendering holders within the range between the minimum and maximum prices. It will select as its purchase price the single lowest price that will it purchase the offer amount of notes or, if less than the offer amount of notes is tendered, all tendered notes). Petco will pay the same purchase price for all tendered notes at or below the purchase price, subject to pro ration.

Should the amount of validly tendered notes at or below the purchase price exceed the offer amount, Petco will accept the notes for purchase in the following order: first, all notes tendered at prices below the purchase price; then notes tendered at the purchase price on a pro rata basis.

Petco plans to fund the offer from cash on hand.

The offer is subject to conditions outlined in the official documents but is not conditioned on a minimum amount of notes being tendered.

Morgan Stanley & Co. Inc. is dealer manager (800 624-1808 or collect at 212 761-1893). Mackenzie Partners, Inc. is information agent (800-322-2885). U.S. Bank NA is depositary for the offer.

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