ION Media extends exchange offer, consent solicitation for 14.25%, 9.75% preferreds

By Angela McDaniels

Seattle, June 25 - ION Media Networks, Inc. extended the exchange offer for its 13.25% cumulative junior exchangeable preferred stock, which is currently accruing dividends at 14.25%, and its 9.75% series A convertible preferred stock to 12:01 a.m. ET on July 11 from July 10.

As of June 20, no shares had been tendered, according to a company news release.

Under the offer, the company will issue new 11% series A mandatorily convertible senior subordinated notes due 2013 and, depending on participation levels in the exchange, either new 12% series A-1 mandatorily convertible preferred stock or 12% series B mandatorily convertible preferred stock.

ION Media is also soliciting consents to amend the certificate of designations of the preferreds to eliminate all voting rights, other than voting rights required by law; its obligation to repurchase the senior preferreds upon a change of control; all redemption rights; all exchange rights for the 14.25% preferreds; and substantially all of the restrictive covenants.

The company is also seeking consent to issue the new preferreds, including the 12% series A-1 convertible preferred stock, which would rank senior to any unexchanged preferreds.

For each tendered share of the 14.25% preferreds, holders will receive $7,000 principal amount of 11% series A notes and $1,000 initial liquidation preference of the 12% series A-1 convertible preferreds.

For each tendered share of the 9.75% preferreds, holders will receive $4,000 principal amount of 11% series A notes and $1,000 initial liquidation preference of 12% series A-1 convertible preferreds.

However, if holders of 50% or less of either series of preferreds tender in the exchange offer and, as a result, ION does not receive the needed consents for its proposed amendments, the offer deadline will be extended by 10 days and holders will instead receive the minority exchange consideration:

• For each tendered share of the 14.25% preferreds, $7,500 principal amount of 11% series A notes and $500 initial liquidation preference of 12% series B convertible preferreds, which would rank junior to any unexchanged senior preferreds; and

• For each tendered share of the 9.75% preferreds, $4,500 principal amount of 11% series A notes and $500 initial liquidation preference of 12 series B convertible preferreds.

If the company receives the needed consents during the 10-day extension, holders will still only receive the minority exchange consideration.

In order to participate in the exchange, holders must tender all shares of 14.25% preferred stock and 9.75% preferred stock that they own and deliver the related consents.

The exchange offer began on June 8 and is part of the company's previously announced recapitalization plan. On May 4, ION Media entered into an agreement with affiliates of Citadel Investment Group, LLC and NBC Universal, Inc. for a comprehensive recapitalization of ION that includes taking the company private.

D.F. King & Co., Inc. is the information agent (800 431-9643).

ION Media is a network television broadcast company based in West Palm Beach, Fla.

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