Wickes gets backing for tender offer for 11 5/8% notes due 2003

New York, Oct. 6 - Wickes, Inc. (Ca/D) said that that Imagine Investments, Inc. - which, together with its affiliates, owns 51.7% of the company's common stock - has agreed to provide up to $10.5 million of financing to enable Wickes to make a cash tender offer for its $21.1 million of outstanding 11 5/8% senior subordinated notes scheduled to mature on Dec. 15.

Wickes, a Vernon Hills, Ill.-based building materials manufacturer and distributor, exchanged new 11 5/8% senior secured notes due 2005 for 67% of the $63.956 million face amount of the 11 5/8% notes due 2003 then outstanding in an exchange offer that began on Dec. 20, 2002 and which was completed on Feb. 26, with holders tendering $42.833 million of the old notes for an identical principal amount of the new ones and leaving about $21.1 million of the old notes still outstanding.

The company said on Aug. 18 that it did not expect to generate enough cash from operations to repay the remaining 2003 notes at their maturity in December, and indicated that it would also have trouble generating enough cash to pay the step-up in interest to 18% effective Dec. 15 on its new 11 5/8% 2005 notes. Wickes said at that time that it had hired investment bankers Brown Gibbons Lang & Co. to assist in the company's plans to improve its capital structure in order to meet its obligations.

Wickes, in announcing the Imagine Investments financing, offered no details as to where the remainder of the cash needed to repay the 2003 notes and to pay the coupon step-up on the 2005 notes would come from.

It said that funding of the loan from Imagine Investments is subject to the approval of Wickes' senior lenders, completion of a tender offer for the notes and other customary conditions.

Under the terms of the agreement, Imagine's loan would mature on July 30, 2005 (subject to Imagine's right to extend the maturity for one year), bear annual interest at 10%, be secured by a second security interest in Wickes' inventory and accounts receivable and be convertible into shares of Wickes common stock at a price of $1 per share.

Wickes further said that Imagine Investments has also encouraged Wickes to consider a rights offering so that if Imagine converts its loan into Wickes common stock, shareholders of Wickes would be entitled to purchase additional shares at the same price per share at which Imagine converts its loan into shares of Wickes common stock.

Wickes said that its board of directors has authorized management to proceed with preparations for an offer to purchase the remaining 11 5/8% notes due 2003 for cash at a significant discount to face value or to exchange new securities for the notes, although the company has not yet established the specific terms of such offers.

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