American Cellular accepts tenders for $714.282 million 10% notes

By Angela McDaniels

Seattle, March 20 - American Cellular Corp. said it received tenders from holders of $855.2 million, or 95%, of its 10% senior notes due 2011 and it accepted on a pro rata basis tenders for $714.282 million of those notes.

The company began a tender offer and consent solicitation on Feb. 14. The tender offer expired at midnight ET on March 19 after being pushed back from March 15.

Initially, the company planned to repurchase up to $900 million of the notes, then lowered that to $675 million on March 6 with the caveat that it could increase the amount at its discretion.

Holders tendered $851.2 million, or 94.6%, of the notes by March 13, the early acceptance deadline, and American Cellular accepted on a pro rata basis $711 million of these notes.

The tender consideration is $1,065.56 for each $1,000 principal amount of notes. It was determined on March 1 based on a fixed spread of 50 basis points over the yield on the 3 7/8% U.S. Treasury note due July 31, 2007. The reference yield and the tender offer yield were 5.044% and 5.544%, respectively.

The company will also pay accrued interest up to but excluding the settlement date, which is expected to be Wednesday.

The tender consideration includes a consent fee of $30.00 per $1,000 principal amount for noteholders who tendered by the consent deadline.

The amendments to the note indenture remove the requirement that the company maintain a debt-to-cash flow ratio of no more than 5 to 1, increase the general restricted payments basket to $35 million from $20 million, permit the company to redeem $18.1 million principal amount of its 9½% senior subordinated notes due 2009 and permit the company to replace its existing $250 million senior secured credit facility with a new $1.05 billion senior secured credit facility.

The company initially sought consents to amend the note indenture to remove substantially all of the restrictive covenants, then changed the proposed amendments on March 12. Most of the restrictive covenants will not be deleted.

American Cellular will fund the repurchase with borrowings under its new $1.05 billion credit facility, which will replace its existing $250 million senior secured credit facility.

Previously, the company planned to fund the tender offer with proceeds from the sale of $425 million new senior notes and a new senior secured credit facility of up to $850 million, but then canceled the note deal on March 6, citing volatility in the bond markets, and increased the size of the credit facility.

Morgan Stanley & Co. Inc. was the dealer manager and solicitation agent (800 624-1808 or call collect 212 761-5384, attention: Tate Forrester), and Bondholder Communications Group was the information and tender agent (212 809-2663, attention: Denise Conway).

American Cellular is a wholly owned subsidiary of Dobson Communications Corp., an Oklahoma City-based provider of wireless phone services to rural markets in the United States.

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