Petro Stopping says $107.6 million discount notes tendered

New York, Jan. 21 - Petro Stopping Centers Holdings LP (Caa3/CCC+) and Petro Holdings Financial Corp. said holders had tendered $107.6 million principal amount at maturity of their $113.37 million outstanding principal amount at maturity of senior discount notes due 2008 by 5.00 p.m. ET on Jan. 21.

The amount tendered is 95% of the outstanding principal amount.

The response is up from $939,000 principal amount at the last announcement on Jan. 12.

As before, holders of 53.1% of the warrants issued by subsidiary Petro Warrant Holdings Corp. had given consents to the proposed change.

The tender offer and warrant consent solicitation will expire at 5 p.m. ET Jan. 27.

Petro Stopping Centers Holdings and Petro Holdings Financial last amended the terms and extended their previously announced tender offer for their senior discount notes due 2008 on Jan. 13.

At that time, the company - which is offering its noteholders a choice of receiving either cash or new notes in exchange for their existing securities -again sweetened the offer in order to encourage greater noteholder participation.

Under the newly revised terms, the cash option was increased to $850 in cash per $1,000 principal amount at maturity ($919.09 in accreted value as of Dec. 31, 2003) of existing notes, up from $790 per $1,000 principal amount announced on Jan. 7.

The all-notes option was increased to $1,135.30 principal amount at maturity ($919.09 initial accreted value at Dec. 31, 2003) of new senior third secured notes due 2014 per $1,000 principal amount at maturity of the existing notes, up from $1,105.96 principal amount at maturity of new notes per $1,000 principal amount of the existing notes announced on Jan. 7.

Petro Stopping also raised the annual accretion and coupon interest rate on the new notes. It said the new notes will accrete until April 30, 2009 at a 4% annual rate, will bear cash interest at a 5% annual rate until April 30, 2009, and after that will bear cash interest at 12.5% - up from the terms announced on Jan. 7 under which the new notes would accrete until April 30, 2009 at 3.5% and pay cash interest at 5% until April 30, 2009 and after that pay cash interest at 11%.

The new notes will be callable at 100% of accreted value until April 30, 2009, and after that for 100% of the principal amount at maturity.

The issuers are continuing unchanged the consent solicitation under which they are looking to eliminate substantially all the restrictive covenants and events of default in the indenture of the existing notes.

The company said that any consents provided and any tenders of existing notes made after Jan. 12 may not be withdrawn. Persons who had previously tendered into the offer under the terms then outstanding have until 5 p.m. ET on Jan. 27 - the offer's scheduled expiration - to indicate whether they prefer the cash option or the new-note option for their consideration.

As previously announced, Petro Stopping, an El Paso, Texas-based travel plaza operator, began tendering for the notes and soliciting noteholder consents and warrant holder consents last fall as part of refinancing of its debt.

The tender offer and warrant consent solicitation were initially due to expire on Sept. 30, but were subsequently extended a number of times.

Under the originally proposed terms, the company was offering $242.57 in cash and $1,030.30 in principal amount at maturity of new senior second secured discount notes due 2014 for each $1,000 principal amount at maturity of the existing notes. The new notes would have begun accruing cash interest at 14% annually on Oct. 1, 2009.

On Dec. 9, PetroStopping amended the original terms of the tender offer to give noteholders the option of receiving all cash for their notes ($670 per $1,000 principal amount of notes) and to revise the proposed cash-and-new notes consideration to $85.39 cash plus $1,001.31 principal amount at maturity ($833.70 in initial accreted value at Dec. 31, 2003), of new senior third secured notes due 2014 per $1,000 principal amount at maturity of the existing notes, with the new notes to accrete in value until April 30, 2009 at a 3.5% annual rate, bear cash interest at a 5% annual rate until April 30, 2009 and bear cash interest after that at an 11% annual rate.

On Jan. 7, the company again amended the terms, increasing the all-cash offer to $790 in cash per $1,000 principal amount of existing notes and converting the original cash-and-notes offer to an all-notes offer under which holders would receive $1,105.96 in principal amount at maturity of new senior third secured notes due 2014 per $1,000 principal amount of the existing notes. The new notes would accrete in value at a 3.5% annual rate until April 30, 2009, would bear cash interest at 5% annual rate until April 30, 2009 and after that, at an 11% annual rate.

In connection with the offer, Petro Stopping Centers Holdings said it intends to refinance substantially all its existing debt to extend its debt maturities, to increase its financial flexibility and to take advantage of conditions in the debt markets.

The information agent is Global Bondholders Services (212 430-3774 or 866 470-4200).

As announced on Jan. 16, Petro Stopping Centers Holdings and Petro Holdings Financial are also conducting a tender offer and consent solicitation for all their outstanding 10½% senior notes due 2007.

The companies are offering to pay $1,020 in cash per $1,000 principal amount to holders who tender their notes and provide consents by 5.00 p.m. ET on Jan. 28. The total includes a $20 per $1,000 principal amount consent payment.

Holders who tender after that date but before the expiration date of 5.00 p.m. ET on Feb. 17 will receive par for the notes.

In both cases, Petro Stopping will also pay accrued interest up to but not including the relevant payment date.

The consent solicitation is to amend the indenture governing the notes to eliminate significantly all of the restrictive covenants and events of default provisions.

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