Stater Bros. completes tender of 10¾% notes, gets 88.5%

New York, June 17 - Stater Bros. Holdings Inc. (B1/BB-) said its tender offer for its 10¾% senior notes due 2006 had expired as scheduled at 9 a.m. ET on June 17, without further extension.

As of that deadline, holders had tendered $397.8 million of the notes, or about 88.5% of the $449.75 million outstanding principal amount, slightly more than the $397.7 million of notes (88.4% of the outstanding amount) which had been tendered by the May 27 consent deadline.

The company has accepted and has paid for all of the tendered notes, and proposed changes in the notes indentures previously consented to by holders of a majority of the outstanding notes have now become operative.

As previously announced, Stater, a Colton, Calif.-based supermarket operator, said on May 14 that it had begun a cash tender offer for any and all of its $449.75 million principal amount of 10¾% notes and was also soliciting consents to amend the notes' indenture to eliminate substantially all of the restrictive covenants.

It set a consent deadline of 5 p.m. ET on May 27 and said that the offer would expire at midnight ET on June 11 (the expiration was subsequently extended).

Stater said that total consideration and tender offer consideration would be determined later.

It said the total consideration per $1,000 principal amount of notes tendered and accepted for payment by the company would be equal to the present value, as of the price determination date, of the $1,026.875 price at which the notes become callable on Aug. 15, 2004, plus accrued interest up to the call date, discounted to a present value using the yield on the reference Treasury, the 6% note due Aug. 15, 2004. It said that based on the reference Treasury yield at 2 p.m. ET on May 14, the price for the notes would be $1,043.19.

Stater said the total consideration would include a $30 per $1,000 principal amount consent payment for those holders validly tendering their notes by the consent deadline and thus consenting to the proposed indenture changes. Holders tendering notes after the consent deadline would not receive the consent payment, and all tendering holders would be paid accrued interest up to, but excluding, the settlement date.

The company said that consents could not be delivered without tendering, or notes tendered without delivering consents, and said that consent of the holders of at least a majority of the notes' principal amount would be needed to approve the indenture amendments.

On May 27, Stater said that as of the expiration of the consent deadline as scheduled at 5 p.m. ET that day, holders of $397.7 million of the notes, or about 88.4% of the total outstanding principal amount, had delivered valid tenders and consents, satisfying the condition that Stater receive the required amount of consents required to adopt the proposed indenture changes.

It said that although a supplemental indenture incorporating the desired amendments had been executed, the amendments would not become operative until the notes were accepted and payment made under the tender offer terms.

The company further announced that the expiration of the tender offer had been extended to 9 a.m. ET on June 16, subject to possible further extension, from the originally announced deadline at midnight ET on June 11. The price determination was scheduled for 2 p.m. ET on June 2.

On May 28, Stater announced that it would sell $685 million of new senior notes in a two-part Rule 144A private placement with the proceeds slated to, among other things, pay for the repurchase of the 10¾% notes (the company ended up pricing an upsized $700 million two-part issue on June 9).

On June 2, Stater said that it would pay total consideration of $1,042.48 per $1,000 principal amount for the 10¾% notes tendered by the consent deadline, while holders tendering after the consent deadline would receive $1,012.48 per $1,000 principal amount.

On June 10, the company announced that the expiration had been further extended to 9 a.m. ET on June 17, subject to possible further extension, from the June 16 deadline.

Stater said that the tender offer would be subject to conditions including the receipt of financing and the receipt of consents of from holders of a majority of the principal amount of the notes.

Global Bondholder Services Corp. was the information agent (866 794-2200 or call collect 212 430-3774). Banc of America Securities LLC was the dealer manager and solicitation agent (contact High Yield Special Products at 888 292-0070 or collect 704 388-4813).

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