Russel Metals gets 10% noteholder consents, extends consent period

New York, Feb. 6 - Russel Metals Inc. (B1) said that it and its RMI USA LLC subsidiary had received consents from the holders of a majority of their 10% note units to proposed changes in the indentures of the notes comprising those units, fulfilling a key condition of their previously announced tender offer for those units.

As of the consent deadline at 5 p.m. ET on Feb. 5, they had gotten consents from the holders of a majority of the holders.

The companies also said that they were extending the time during which holders could tender their units and receive total consideration, including a consent payment; the consent period will now coincide with the expiration of the offer, assuming all other terms and conditions are met.

The offer is scheduled to expire on Feb. 20, subject to possible extension.

As previously announced, Russel Metals, a Toronto-based metals distribution company, said on Jan. 23 that its it and its RMI subsidiary had begun a tender offer for their $115.6 million of outstanding units, which consist of $600 principal amount of 10% senior notes due 2009 issued by Russel and $400 principal amount of 10% senior notes due 2009 issued by RMI.

The issuers said they were also soliciting consents to amend the notes' indenture to eliminate substantially all the covenants and some events of default.

Russel/RMI set a consent deadline of 5 p.m. ET on Feb. 5 (since extended), and said the tender offer would expire at 12 a.m. ET on Feb. 20, subject to possible extension.

Holders tendering their notes and delivering consents by the consent deadline would receive total consideration of $1,072.50 per unit, plus accrued interest up to but not including the settlement date. Total consideration would include a $20 per $1,000 principal amount consent payment.

Holders tendering after the consent deadline but before the expiration would receive tender offer consideration of $1,052.50 per unit, plus accrued interest up to but not including the settlement date, but would not receive the consent payment.

Russel added that it intends to call for redemption any units not tendered shortly after June 1 at the redemption price of $1,050 per unit plus accrued interest.

The company said the tender offer would be subject to various conditions including the now-fulfilled requirement of receipt of consents necessary to amend the indenture and completion of an offering of $175 million of senior notes due 2014.

Russel said it will use proceeds from the new notes to fund the tender offer, to repurchase its 7½% class II preferred shares, series C and its 8% subordinated debentures due June 15, 2006.

Citigroup Global Markets Inc. (800 558-3745 or collect at 212 723-6106) is the dealer manager for the offer. Global Bondholder Services Corp. (800 470-3700 or collect at 212 430-3774) is the information agent.

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