Kellwood prolongs early deadline, plans to rescind tender for up to $60 million 7 7/8% notes

By Jennifer Chiou

New York, Jan. 28 - Kellwood Co. announced that it extended the early deadline in its tender offer and also intends to rescind the cash offer for up to $60 million principal amount of its 7 7/8% debentures due 2009 prior to the expiration of Sun Capital Securities Group, LLC affiliate Cardinal Integrated, LLC's unsolicited $21.00 per share tender offer for all of the outstanding shares of Kellwood.

The early tender deadline for the debentures is now 5 p.m. ET on Feb. 13, extended from Jan. 30 and Jan. 23. The debt tender offer is set to expire at midnight ET on Feb. 6.

As of midnight ET on Jan. 27, holders had tendered $133.7 million of notes.

If a majority of shareholders tender, the offer for the shares is scheduled to be completed at midnight ET on Feb. 12.

On Jan. 15, Sun Capital said it was prepared to reduce the offer price to $19.50 if Kellwood does not terminate the tender offer for its 7 7/8% debentures as Sun Capital had asked on Jan. 10.

According to Sun Capital, the price reduction reflects the decrease in Kellwood's equity value resulting from the bond tender and other "ill-advised initiatives."

Kellwood said that it plans to remove all impediments to the share tender offer, adding that its board is not taking any position on whether stockholders should tender their shares.

Kellwood announced the debt tender offer on Jan. 8. The company said it would fund the offer with a portion of the proceeds from the sale of its Smart Shirts business.

Investors who tender by the early deadline would receive the total consideration of $1,035 per $1,000 principal amount of notes, which includes an early tender premium of $30.00.

Kellwood said it would also pay accrued interest to the payment date.

If the company receives tenders in excess of $60 million, it would accept the notes on a pro rata basis.

J.P. Morgan Securities Inc. is the dealer manager (866 834-4666 or call collect 212 834-3424). Global Bondholder Services Corp. is the information agent (call collect 212 430-3774 or 866 470-3900).

Kellwood is a St. Louis-based marketer of apparel and consumer soft goods.

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