aaiPharma extends, amends consent solicitation for 11% notes

New York, April 19 - aaiPharma Inc. (Ca/CCC) said it has amended its previously announced solicitation of consents and waivers from the holders of its 11% senior subordinated notes due 2010 and has extended the solicitation period.

The solicitation, which had been scheduled to expire on April 16, will now expire at noon ET on April 20, subject to possible extension.

All holders of record as of 5 p.m. ET on April 7 who have already deliver consents and who deliver them by the deadline and do not subsequently revoke them will receive a $10 per $1,000 principal amount consent fee, subject to the terms and conditions of the solicitation.

Holders who have previously delivered consents need not take any further action to receive the consent fee.

The extension of the consent solicitation, the offer of a consent fee, and certain other amendments to the solicitation follow discussions between the company and certain bondholders.

The company said that the principal amendments to the solicitation would: (1) require the company to grant a silent, junior lien in favor of the notes on the collateral that will secure the company's proposed new senior credit facility; (2) increase the interest rate on the notes to 11½%, which would start to accrue as of April 1; (3) limit the proposed suspension of the company's obligation to file periodic reports with the SEC to no later than Sept. 30; (4) limit the company's ability to grant certain liens and incur certain debt; and (5) increase the permitted amount of the company's contemplated new credit facility from $135 million to $140 million.

aaiPharma said that in addition to the receipt of valid and unrevoked consents from holders of a majority of the outstanding notes, the solicitation would be subject to various other conditions. It said that such conditions for the benefit of holders of notes, not waivable by the company, include: (1) closing of aaiPharma's new senior credit facility; (2) completion of the sale of aaiPharma's M.V.I. product business to Mayne Pharma; (3) payment in full of the April 1 interest payment on the notes (including defaulted interest); (4) the repayment and termination of the company's existing credit facility; (5) receipt of prepayments of certain royalties; and (6) delivery of certain legal opinions to the trustee for the notes.

aaiPharma intends to close the new credit facility, complete the M.V.I. sale and pay the April 1 interest payment on the notes as soon as practicable after the expiration of the solicitation.

It also said it intends to execute the supplemental indenture containing the proposed amendments as soon as practicable following the expiration of the solicitation but said the proposed amendments would not become operative until the April 1 interest payment had been made and the other conditions for the benefit of holders of notes satisfied.

As previously announced, aaiPharma, a Wilmington, N.C., pharmaceutical company, said on April 8 that it had begun soliciting consents from holders of its 11% notes, seeking their approval of proposed amendments to the notes' indenture, and waivers under the indenture, to address, among other things, the company's current inability to file its form 10-K for the year ended Dec. 31, 2003.

It set a solicitation deadline of 5 p.m. ET on April 16, which has since been extended.

The company said holders delivering consents would receive $10 per $1,000 principal amount of notes, subject to the amendment taking effect.

It said the amendment would only become operative if the required consents were to be received, if aaiPharma completes an amendment or refinancing or other replacement of its senior credit agreement that waives all existing defaults, and if aaiPharma makes the interest payment that came due on the notes on April 1.

On April 16, aaiPharma said that it believed that consents from holders of a majority of the outstanding had been received, and said that it had been having discussions with certain of the noteholders on the terms and conditions of the solicitation; certain of these noteholders had submitted consents. It said that it would amend and extend the solicitation the following Monday.

Global Bondholder Services Corp. is the information agent (banks and brokers call collect 212 430-3774, noteholders call 866 470-3700. Banc of America Securities LLC is the solicitation agent (888 292-0070 or collect at 704 388-4813).

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