Hollinger fixes price in tender for 9% notes

New York, July 16 - Hollinger International Inc. said its Hollinger International Publishing Inc. subsidiary has fixed pricing in its tender offer and consent solicitation for its $300 million outstanding 9% senior notes due 2010.

The reference yield will be 2.715%, giving a tender offer yield of 3.215%.

If payment occurs on Aug. 2 then noteholders will receive $1,172.63 per $1,000 principal amount plus accrued interest up to but excluding the payment date. Holders who tender after the consent deadline will receive $30 per $1,000 less.

At its last announcement on July 13, Hollinger said it received the necessary consents to amend its 9% notes.

As of 5 p.m. ET on July 13, holders had tendered 71.25% of the notes and delivered consents.

Hollinger International Publishing has executed a supplemental indenture with the amendments which will become operative when it accepts the notes for payment.

Notes may no longer be withdrawn and consents may no longer be revoked.

On July 8 Hollinger amended the tender offer for the 9% notes and extended the consent payment deadline.

The payment on offer for the notes will now be determined using a spread of 50 basis points over the 2 5/8% Treasury note due Nov. 15, 2006 instead of a spread of 100 basis points.

The consent deadline is now 5 p.m. ET on July 15 instead of 5 p.m. ET on July 8.

All other terms are unchanged.

Hollinger said on June 24 Hollinger International Publishing had begun a cash tender offer for any and all of its $300 million principal amount of 9% senior notes due 2010 and is also soliciting noteholder consents to proposed indenture changes that would eliminate substantially all of the restrictive covenants and certain events of default.

It set a consent deadline of 5 p.m. ET on July 8 - subsequently extended - and said the tender offer would expire at midnight ET on July 30, subject to possible extension.

Hollinger, a Chicago-based international publisher whose holdings include the Chicago Sun-Times and the Daily Telegraph and Sunday Telegraph in London, said that holders validly tendering their notes by the consent deadline would receive total consideration using a formula based on a fixed spread of 100 basis points over the bid-side yield to maturity on the pricing date of the reference security, the 2 5/8% U.S. Treasury note due Nov. 15, 2006.

The total consideration will be equal to the present value on the payment date of $1,045 (the amount payable on the first date on which the notes may be redeemed, plus the present value of accrued interest from the payment date to the redemption date) as determined by the formula. Total consideration will also include a consent payment of $30 per $1,000 principal amount of notes. Noteholders tendering their notes after the consent deadline will not receive the consent payment.

All tendering noteholders will receive accrued interest up to but not including the payment date.

Notes may not be tendered without consents to the proposed indenture amendments.

Hollinger plans to pay for the repurchase of the 9% notes out of the proceeds of the planned sale of its Telegraph Group Ltd. subsidiary, which publishes the Telegraph newspapers in Britain, to Press Acquisitions Ltd. for £729.5 million/$1.327.4 billion. The after-tax proceeds of the transaction are expected to be about £625.3 million/$1.137.7 billion. Besides repurchasing the 9% notes, Hollinger International plans to apply proceeds from the Telegraph sale to the repayment of outstanding debt of its subsidiaries' bank credit agreement.

Conditions of the tender offer include the consummation of the Telegraph sale on terms producing sufficient proceeds to Hollinger to allow it to repurchase the notes and to repay all of its borrowings under its existing bank credit facility; the receipt by the company of the consents to the indenture changes from holders of at least a majority of the outstanding principal amount of the notes and Hollinger's execution of a supplemental indenture incorporating the proposed amendments and certain other customary conditions.

Wachovia Securities is the dealer manager and solicitation agent (704 715-8341 or 866 309-6316). Global Bondholder Services Corp. is the depositary and information agent (212 430-3774 or 866 470-3800).

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