Hong Kong's City Telecom gets consents needed to amend 8¾% notes

By Angela McDaniels

Tacoma, July 1 - City Telecom (H.K.) Ltd. has received tenders and consents from holders of a majority of its $72,425,000 of 8¾% senior notes due Feb. 1, 2015, according to a company news release.

A tender offer and consent solicitation began for the notes on June 17. City Telecom extended the consent date from 5 p.m. ET on June 30 to 11:59 p.m. ET on July 15, which is when the tender offer expires.

The consents will allow the company to amend the indenture to eliminate substantially all of the restrictive covenants, reduce the scope of its reporting obligations and amend the circumstances under which holders may put back the notes.

The company said it will soon execute a supplemental indenture containing the changes, and the amendments will become operative once the tendered notes are purchased.

Holders will receive $950 for every $1,000 principal amount of notes tendered, including a $20 consent payment.

City Telecom will also pay accrued interest to the payment date, which is expected to be July 20.

The company said it plans to fund the offer with available cash resources.

The company previously said that holders of $16.93 million, or about 18.9%, of the notes tendered their securities in an offer that ended on April 23. Holders received $750 per note in that offer.

Another previous tender offer for the notes was terminated on Sept. 12, 2008 because the financing condition could not be satisfied due to adverse market conditions. The company added that it had planned to fund the offer using a portion of the proceeds from a new debt financing.

As previously reported, the company bought back $10.85 million of the notes on Dec. 6, 2007, $3 million on Dec. 7, 2007, $13.85 million on Dec. 10, 2007, $3 million on Dec. 19, 2007, $5 million on Jan. 22, 2008, $3.55 million on Feb. 22, 2008 and $10.25 million on Feb. 29, 2008.

Citigroup Global Markets Inc. (800 558-3745 or call collect 212 723-6108) is the dealer manager and solicitation agent. D.F. King & Co. (888 887-0082) is the information agent.

City Telecom is Hong Kong's second-largest international direct-dialing operator.

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