Brookstone accepts 12% note tenders, extends offer expiration again

By Marisa Wong

Madison, Wis., Oct. 6 - Brookstone Inc. wholly owned subsidiary Brookstone Co. Inc. said it has agreed to purchase all 12% second-lien senior secured notes due 2012 that have been tendered thus far in its purchase/exchange offer and consent solicitation.

Brookstone said it also waived all conditions to its obligation to acquire the notes that are tendered before the offer expires, including the condition that at least 95% of the 12% notes be tendered, which the company waived with the consent of holders of more than 66 2/3% of the 12% notes that were tendered by 5 p.m. ET on Oct. 1, the cash tender deadline.

The offer expiration has been extended to 5 p.m. ET on Oct. 21. The expiration was previously extended for the fourth time, to 5 p.m. ET on Oct. 18 from Sept. 17. The deadline was originally set for June 4 but was extended to July 16, then to Aug. 13 and subsequently to Sept. 17.

The company said that holders will be able to elect to receive cash until the offer expires.

The company offered to purchase the 12% notes for $975 in cash for each $1,000 of notes tendered or to issue 13% second-lien senior secured notes due 2014 in exchange for the 12% notes at a rate of $900 of 13% notes for each $1,000 of 12% notes.

The company said that only $20 million is available for cash purchases, and to the extent that sum is not enough to purchase all the 12% notes tendered for cash, the $20 million will be prorated.

As of 5 p.m. ET on Oct. 5, $154,278,000 of 12% notes had been tendered. Of this, holders of $151,066,000 principal amount elected to receive cash. Holders who do not elect to receive cash will receive 13% notes with a principal amount equal to 90% of the principal amount of the 12% notes they tendered.

Holders who tender their notes are also submitting consents to amend the note indenture to remove all the covenants and events of default as well as to release the collateral, which is substantially all the assets of Brookstone and its subsidiaries.

The company has reached the needed amount of consents and expects to have a supplemental indenture effecting the amendments within a day or two of its most current announcement. Those amendments will become operative shortly after the offer expires.

Brookstone said that once it acquires the tendered 12% notes, the assets will become collateral for the new 14% notes.

Questions may be directed to Philip Roizin, executive vice president, operations and chief financial officer, at 603 880-9500.

The specialty retailer is based in Merrimack, N.H.

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