CapitalSource 12¾% noteholders give OK to increase share repurchases

By Susanna Moon

Chicago, Sept. 15 - CapitalSource Inc. said it received tenders for 99% of its $272.5 million of 12¾% first-priority senior secured notes due 2014 by the consent deadline of 5 p.m. ET on Sept. 14.

Those who tender their notes are required to deliver consents and vice versa.

The consents received are enough to amend the notes. As a result, the company executed a supplemental indenture to eliminate substantially all of the restrictive covenants and events of default. That paved the way for an increase in the authorized amount of share repurchases by $200 million, bumping the total up to $385 million, according to a company press release.

Any share repurchases made under the increased authorization announced Sept. 15 will be made in the open market or through privately negotiated deals from time to time until December 2012.

The tender offer will continue until 5 p.m. ET on Sept. 28. The withdrawal deadline has passed. The tender offer and consent solicitation for the 12¾% notes began Aug. 31.

CapitalSource will pay $1,265, including a $50 consent fee, per $1,000 principal amount of notes tendered by the consent deadline.

The company will also pay accrued interest.

Funding for the offer will come from available cash.

The dealer manager and solicitation agent is Credit Suisse Securities (USA) LLC (800 820-1653 or call collect 212 325-5912). The trustee is U.S. Bank NA (800 934-6802).

Chevy Chase, Md.-based CapitalSource is a commercial lender.

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