Friendly Ice Cream starts tender for 8 3/8% notes

By Jennifer Chiou

New York, July 26 - The Friendly Ice Cream Corp. announced the launch of a cash tender offer for any and all of its $175 million of 8 3/8% senior notes due 2012.

The Wilbraham, Mass.-based restaurant company also is soliciting consents that would, among other things, substantially eliminate all of the restrictive covenants and certain events of default.

The company is seeking consents from holders of a majority of notes.

The consent deadline is 5 p.m. ET on Aug. 8. The offer expires at midnight ET on Aug. 22.

For each $1,000 in principal amount, the company will calculate its payout using a fixed spread of 50 basis points over the yield on the 4.875% Treasury due May 31, 2008.

The payout will include a $30.00 consent payment for those who tender by the early deadline.

Friendly Ice Cream also will pay accrued interest to the settlement date.

As previously announced, on June 17, Friendly Ice Cream entered into a merger agreement among parent Freeze Operations Holding Corp. and Freeze Operations, Inc., a wholly owned subsidiary of its parent, under which the subsidiary will merge into Friendly Ice Cream.

The offer is conditioned on, among other things, the closing of the merger as well as the execution of a supplemental indenture.

Barclays Capital Inc. is the dealer manager and solicitation agent (call collect 212 412-4072 or 866 307-8991). Georgeson Inc. is the information agent (888 605-7583).

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