Wickes terminates exchange offer; retains Bridge as advisor

By Jeff Pines

Washington, Jan. 12 - Wickes Inc. terminated its offer to exchange either $500 in cash and $250 in principal of new 10% convertible notes due 2007, or $1,250 in new notes or $650 in cash for each $1,000 of principal of its existing 11 5/8% senior subordinated notes that matured Dec. 15.

"While the Wickes team worked diligently to make the exchange offer a success, the lack of response from a large number of senior subordinated note holders was very disappointing," said Jim O'Grady, the company's president and chief executive officer in a press release.

As of Friday, holders had tendered 50.8% or $10.73 million of notes. This includes $3.55 million in notes tendered by Barry Segal of Bradco Supply, the largest holder of notes. Segal held 16.8% of the outstanding notes.

The exchange had been subject to at least $20,066,850 principal amount of the notes being exchanged, or 95% of the outstanding amount.

Wickes, a Vernon Hills, Ill.-based distributor of building products, also has retained Bridge Associates as a financial advisor to help it with its restructuring.

Two board members recently resigned and O'Grady joined the board. A company official was not available to respond to questions before press time.

The company previously said it was "exploring all available options" should it be unable to close the exchange.

Wickes previously extended the exchange offer several times, most recently to 5 p.m. ET Jan. 9

As of late on Dec. 29, $10.922 million or 51.7% of the outstanding principal amount of the notes had been tendered including $3.550 million tendered by the largest holder, Barry Segal of Bradco Supply.

Wickes had earlier amended the terms of the offer to allow tendering noteholders to elect to receive either $500 in cash and $250 principal amount of new 10% convertible notes due 2007; $1,250 principal amount of new convertible notes; or $650 in cash. The change gives noteholders an all-cash option not previously offered and raises the amount of new notes offered under the all-notes option. The notes-and-cash option remains unchanged.

Wickes also said that in any case, if the exchange offer is completed, tendering noteholders will also receive accrued and unpaid interest on the subordinated notes at the existing coupon rate from June 16, 2003 through the closing date of the exchange offer.

As previously announced, Wickes said on Nov. 4 that it was offering new convertible notes or a combination of cash and convertibles for its $21.123 million principal amount of 11 5/8% notes.

The exchange was originally supposed to run through 5 p.m. ET Dec. 3, although the deadline was subsequently extended.

The company said that for each $1,000 principal amount of the existing notes, it was offering either $500 in cash and $250 principal amount of new 10% convertible notes due June 15, 2007 or $1,000 principal amount of the new convertibles (the latter, all-notes, option was subsequently increased and an all-cash option added to the consideration choices). Holders would also receive accrued interest.

The convertibles have a conversion price of $1.00 per share.

Wickes said it was making the exchange offer because it did not expect to generate sufficient cash from operations to pay the subordinated notes on their scheduled Dec. 15 maturity date.

Unless all the subordinated notes were to be tendered in the exchange, Wickes said it expected to default on its payment obligation.

Closing would also be subject to Wickes obtaining the consent of its senior lenders to the exchange and the funding of an additional term loan under the senior credit facility, or the company entering into other financing arrangements under which it will borrow funds to make the cash payment in the exchange.

The information agent is D. F. King & Co. Inc. (888 869-7406), and the exchange agent is HSBC Bank USA (718 488-4475 attention: Paulette Shaw).

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