Kohlberg to tender for all Centerplate shares, 70% of notes in merger

By Jennifer Chiou

New York, Sept. 19 - Centerplate Inc. announced that it signed a merger agreement with an affiliate of Kohlberg & Co., LLC, under which Kohlberg will acquire Centerplate in an all-cash transaction.

Centerplate said that its board has unanimously approved the transaction.

Under the terms of the agreement, the transaction will be accomplished through a debt tender for up to 70% of the subordinated notes and a merger in which 100% of Centerplate's stock will be acquired.

Unitholders who tender the notes underlying their units will receive $3.99 for each note tendered. At the closing of the merger, unitholders will also receive $0.01 per common share underlying their units for a total payment to Centerplate holders of $4.00 per unit, representing a premium of about 33% over Centerplate's closing price.

The company's shares closed at $3.00 per share on Thursday.

"Given the realities of the economic environment and tight credit markets, we are confident that we have found the best available outcome for our unit holders and the company," Centerplate's chairman of the board David Williams said in a news release.

The transaction is expected to be completed in the first quarter of 2009 and is subject to the approval of holders of a majority of the common stock, receipt of valid tenders of 50.1% of the notes, receipt of consent from holders of at least 50.1% of the notes to certain amendments to the indenture as well as receipt of third-party approvals and other customary closing conditions.

The release noted that the transaction will be financed by Kohlberg through a combination of equity and debt financing.

Centerplate said it also obtained an additional amendment to its senior credit facility to allow time for the completion of the acquisition by Kohlberg.

The key terms of the new amendment extend the adjusted senior leverage ratio and exclude transaction fees from the calculation of the ratios.

While the amendment permits Centerplate to pay interest on the subordinated notes on Nov. 20, the credit agreement will require the company to defer interest on the subordinated notes following the November payment until the closing of the transaction.

Deferred interest and accrued interest will be paid on the closing date of this transaction.

UBS Investment Bank is financial advisor to Centerplate and Cahill Gordon & Reindel LLP is acting as its legal advisor.

Centerplate is a Stamford, Conn.-based provider of entertainment experiences in sports, entertainment and convention center venues.

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