American Media further extends tender offers for 10¼%, 8 7/8% notes

By Angela McDaniels

Tacoma, Wash., Jan. 27 - American Media Operations, Inc. said it again extended its tender offers and consent solicitation for about $570 million of its senior subordinated notes, consisting of $400 million of its 10¼% series B senior subordinated notes due 2009 (Cusip 02744RAH0), $14.54 million of its 10¼% series B senior subordinated notes due 2009 (Cusip 02744RAM9), $150 million of its 8 7/8% senior subordinated notes due 2011 (Cusip 02744RAK3) and $5.45 million of its 8 7/8% senior subordinated notes due 2011 (Cusip 02744RAP2).

The company extended the deadline twice on Tuesday: first to 11:59 p.m. ET on Jan. 27 and then to 8 a.m. ET on Jan. 29. It was originally scheduled for Sept. 25 and has been extended a number of times, most recently to Jan. 26.

The offers were also amended to allow holders to tender their notes in increments of $1 and to reduce the minimum tender condition to 96.5% of the outstanding 2009 notes and 95% of the outstanding 2011 notes.

Holders had tendered $394.96 million, or 95.3%, of the 2009 notes and $146.13 million, or 94%, of the 2011 notes as of 5 p.m. ET on Jan. 26, according to a company news release.

The company has been advised that an additional $5.53 million of the 2009 notes and $1.81 million of the 2011 notes will be tendered. If these additional tenders are made and no previously tendered notes are withdrawn, the revised minimum tender conditions will be met.

As announced on Aug. 27, the company is soliciting consents to eliminate substantially all of the restrictive covenants, some events of default and other related provisions in the indentures governing the notes. Holders who tender must submit consents.

For each $1,000 principal amount, the company is offering $807.55 for the 2009 notes and $756.31 for the 2011 notes. In each case, the payment includes accrued interest and a consent payment of $10.

In order to tender notes in the offers, a holder must agree to purchase new notes being sold in concurrent offerings and shares of American Media, Inc.'s common stock for a purchase price equal to the payment received in the tender offers.

The company is offering $21.25 million of 9% senior pay-in-kind notes due 2013 to the holders of the 2009 notes and, to all noteholders, $300 million of 14% senior subordinated notes due 2013 and up to 5.7 million American Media shares, which represents 95% of its common stock.

Assuming 100% of the notes are tendered, holders will be required to purchase $51.24 of the 9% notes, $526.31 of the 14% notes and 10 shares at $23.00 each for each $1,000 principal amount of 2009 notes. Holders of the 2011 notes will be required to purchase $526.31 of the 14% notes and 10 shares for $23.00 each.

On Tuesday, the company said that if fewer than 98% of the notes are tendered and accepted for payment, (a) the total amount of new notes offered would remain unchanged but the total number of shares offered would decrease and (b) for each $1,000 principal amount of notes, (i) the amount of the notes required to be purchased would increase and the price would decrease and (ii) the number of shares required to be purchased would increase and the price would increase.

When the tender offers began, the company had been offering to noteholders:

• 250,000 mandatorily convertible units comprised of $250 million of 12% senior notes due 2013 and $15.91 million principal amount at maturity of special senior subordinated discount notes due 2013;

• Up to $340.36 million principal amount at maturity of 10¼% mandatorily convertible senior subordinated discount notes due 2013; and

• Up to 320,000 warrants to purchase a like number of shares of class A common stock.

Under a previous amendment, the company is now permitted to waive the supplemental tender condition for either of the offers. The change means it can complete the tender offer without receiving the necessary consents. Should that occur, the notes will not be amended, but holders will still receive the full payment.

The waiver could apply to the tender offer for the 2009 notes, the tender offer for the 2011 notes or both.

The dealer manager and solicitation agent is J.P. Morgan Securities Inc. (call collect 212 357-0775), and the information agent and tabulation agent is MacKenzie Partners, Inc. (800 322-2885 or call collect 212 929-5500).

American Media Operations is a subsidiary of American Media, which is a Boca Raton, Fla., magazine publisher.

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