Tenneco cuts size of tender offer for 11 5/8% notes, alters other terms

New York, May 20 - Tenneco Automotive Inc. said it amended the terms of its previously announced tender offer for its 11 5/8% senior subordinated notes due 2009.

The amended tender offer will expire at midnight ET June 3, subject to possible extension, and is expected to settle on June 4. Holders who tendered notes under the terms of the original tender offer and consent solicitation may withdraw their notes up to the amended expiration time.

Tenneco has reduced the amount of notes it is tendering for to $130 million from the original $500 million, the full outstanding amount. The change follows the company's separate announcement that it will not proceed with a planned offering of $420 million of new notes, due to current market conditions. Proceeds from the offering were to have been used to fund most of the tender offer.

The company also said that noteholders who have validly tendered and not withdrawn their notes before the amended offer expires will receive as payment for the notes $1,093.40 per $1,000 principal amount of notes tendered and accepted for purchase, plus accrued and unpaid interest up to, but not including, the date of payment for the notes - the company had originally announced total consideration of $1,095.50 per $1,000 principal amount, including a consent payment of $30.

Tenneco - which had also originally sought noteholder consent to proposed indenture changes - said that because the amended tender offer will be for less than a majority of the outstanding notes, it will not include a consent solicitation and, as a result, those proposed amendments to the indenture will not become effective in connection with this transaction.

Tenneco said that the amended offer remains subject to certain conditions, including receipt by the company of financing sufficient to complete the offer on acceptable terms.

As previously announced, Tenneco, a Lake Forest, Ill., auto parts maker, said on April 30 it had begun a cash tender offer and consent solicitation for its $500 million of 11 5/8% notes (the amount was subsequently reduced and the consent solicitation eliminated).

The company said the offer was part of the transaction announced April 16 designed to reduce leverage and annual interest expense.

Tenneco originally said holders who tendered their notes by the now-expired consent deadline of 5 p.m. ET on May 13 would receive $1,095.50 per $1,000 principal amount including a consent payment of $30.00 per $1,000 principal amount, while holders tendering after the consent deadline but before the expiration date of midnight ET on May 27 would receive $1,065.50 per $1,000 principal amount, plus accrued interest up to but excluding the date of payment. (The consideration was subsequently amended and the expiration deadline extended).

Tenneco said on May 13 that it had received the necessary consents to amend the notes' indenture.

The company said that it executed a supplemental indenture but it will not become effective until Tenneco accepts the notes for payment.

Holders who tender their notes will be required to consent to amendments to the note indenture which will, among other things, eliminate substantially all of the restrictive covenants, amend the satisfaction and discharge provisions and eliminate certain events of default.

Banc of America Securities LLC (contact High Yield Special Products at 888 292-0070 or 212 847-5834) and J.P. Morgan Securities (contact High Yield Capital Markets at 212 270-9153) are dealer managers. Global Bondholder Services (866 873-7700 or 212 430-3774) is the information agent.

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