Ziff Davis Media completes 12% '10 note exchange

Ziff Davis Media Inc. (CCC-) said on Monday (Aug. 12) that it had successfully completed its previously announced offer to exchange a package of cash and new notes for its outstanding 12% senior subordinated notes due 2010, along with the related solicitation of noteholder consents to its previously announced proposed financial restructuring plan. The exchange offer expired as scheduled at 5 p.m. ET on Aug. 9, with no further extension. As of that deadline, holders of 95.1% of the outstanding notes formally accepted the terms of the out-of-court financial restructuring plan. The 12% noteholders who tendered their bonds in the exchange offer will receive an aggregate of approximately $21.2 million in cash and $90.3 million in new senior subordinated notes issued by Ziff Davis Media. They will also receive an aggregate of approximately $28.5 million of a new series of preferred stock and warrants for the purchase of 5.2 million common shares of Ziff Davis Media's corporate parent, Ziff Davis Holdings Inc. Ziff Davis Media said it is now planning to finish the related documentation and distribute proceeds for its financial restructuring plan within the next several days.

Meantime, interest which came due on July 15 on any of the existing notes which were NOT tendered in the exchange offer, will be funded by Aug. 14. With the completion of the exchange offer clearing the way for consummation of the other transactions associated with the overall financial restructuring, Ziff Davis Media said that it will reduce its outstanding debt by approximately $147.4 million and its cash debt service requirements over the next several years by over $30 million annually as a result of the restructuring.

AS PREVIOUSLY ANNOUNCED, Ziff Davis Media, a New York-based publisher of technology-oriented magazines, said on May 1 that bondholders representing approximately 60% of its $250 million of 12% notes had agreed in principle to participate in a comprehensive financial restructuring, under which the company would offer the holders of the outstanding notes an aggregate of $30 million in cash, $95 million in new payment-in-kind senior subordinated notes issued by Ziff Davis Media, as well as both shares of a new preferred stock and warrants for the purchase of common stock of Ziff Davis Holdings, in exchange for their existing notes. Completion of the exchange offer would allow Ziff Davis to reduce its debt by approximately $155 million and its cash debt service requirements over the next several years by approximately $30 million annually (the former figure was eventually revised slightly). Ziff Davis also announced that in connection with such agreements, the controlling stockholder of Ziff Davis Holdings - Willis Stein & Partners III LP - and other existing stockholders had agreed in principle to make an equity cash infusion of $80 million, in exchange for new preferred stock and warrants for the purchase of common stock in Ziff Davis Holdings Inc. in order to facilitate the planned restructuring. Ziff Davis Media's existing bank credit agreement would meanwhile remain in place, with an amendment incorporating certain anticipated modifications to be negotiated with the bank lenders. Ziff Davis said that the obligations of all parties to participate in the financial restructuring would be subject to a number of conditions, including an amendment to the senior bank credit agreement, acceptances of the exchange offer for the notes by the holders of at least 95% of the existing senior notes, and finalization of documentation.

In connection with the exchange offer, Ziff Davis further said that it planned to solicit consents for a pre-packaged plan of reorganization which, if used, would result in the company's business operations continuing uninterrupted and with customers, trade creditors and employees being unaffected. The company said that following the negotiation of a comprehensive amendment to its bank credit agreement, it expected to begin to formally solicit bondholders within the next few weeks to tender their senior notes in the proposed exchange offer.

On June 17, Ziff Davis said that it had received consents from the holders of approximately 90% of the outstanding loans under its senior credit facility and had reached an agreement in principle with those holders regarding the proposed amendment to the existing credit agreement. It said that the proposed amendment provided for, among other things, the company's existing senior credit agreement to be amended and restated, subject to certain customary conditions, including the final approval by all of the lenders and the completed restructuring of the company's 12% notes. Ziff Davis further said that it had formally begun solicitation of votes in support of its financial restructuring plan from holders of the 12% notes and from the senior lenders. The company reiterated that it was on track to complete its financial restructuring by the end of the summer.

On July 16, Ziff Davis said that it had extended its previously announced offer to exchange a package of cash and new notes for the 12% notes, along with the related solicitation of noteholder consents to the proposed financial restructuring plan. The offer was extended to 9 a.m. on July 23, 2002, subject to possible further extension, with the holders of over 87% of the aggregate face amount of the bonds having formally accepted the exchange offer, while over 95% of bondholders and senior bank lenders who voted also consenting to the prepackaged plan which Ziff Davis might use to implement the restructuring. The company also said that the $15 million bond interest payment that came due on July 15 will be included as part of the total value of cash and new securities that will eventually be issued to the noteholders once the exchange offer or the pre-packaged plan of reorganization is completed. On July 23, Ziff Davis again extended the exchange offer and consent solicitation for the 12% bonds to 9 a.m. ET on July 30 and said that so far the holders of over 88% of the bonds had formally accepted the terms of the financial restructuring plan, with approximately 98% of these same note holders and approximately 96% of the company's voting senior bank lenders consenting to implement the same financial restructuring plan through the prepackaged plan of reorganization.

On July 31, Ziff Davis further extended the exchange offer to 9 a.m. ET on Aug. 1, from the previous July 30 deadline. So far, holders of approximately 88% of the aggregate face amount of bonds had now formally accepted the exchange offer, and over 98% of the same bondholders and 96% of the senior bank lenders who voted had also consented to the prepackaged plan. On Aug. 2, Ziff Davis again extended the exchange offer to 9 a.m. ET on Aug. 5, from the previous Aug. 1 deadline. Ziff Davis also said that so far, holders of approximately 91% of the outstanding bonds had accepted the exchange offer, up from 88% previously. There was no change in previous noteholder and bank consent levels for the pre-packaged plan. On Aug. 6, the company again announced that the offer would be extended, to 5 p.m. ET on Aug. 6 from the previous Aug. 5 deadline, and said that holders of 92% of the notes had now tendered them, up from 91% previously. There was no change in previous noteholder and bank consent levels for the pre-packaged plan.

On Aug 7, Ziff Davis said that it had again extended its exchange offer to 5 p.m. ET on Aug. 9, subject to possible further extension, from the previous Aug. 6 deadline. The company also said that as of Aug. 1, holders of approximately 95.1% of the aggregate face amount of bonds had formally accepted the exchange offer, up from the 92% reported previously, thus satisfying the previously announced minimum condition for noteholder participation. It also said that it had reached agreement in principal with the holders of 100% of the outstanding loans under its senior credit facility regarding a previously announced proposed amended and restated credit agreement. Willis Stein & Partners III, LP and certain of its affiliates meantime agreed to purchase for $720,000 from a tendering bondholder certain equity securities of Ziff Davis Media's corporate parent, Ziff Davis Holdings Inc., that will be issued to that bondholder in the exchange offer. The company said the Willis Stein purchase would be contingent upon the completion of the exchange offer.

J.C. Penney completes exchange offer for three series of existing notes

J.C. Penney Co. Inc. (Ba3/BBB-) said on Monday (Aug. 12) that it had completed its previously announced offer to exchange new debt for its outstanding 6 1/8% notes due 2003, 7 3/8% notes due 2004 and 6.9% debentures due 2026 (which are putable back to the company on Aug. 15, 2003) and had also completed the related consent solicitation seeking certain amendments to the indentures under which those notes were issued. Penney said that holders had tendered $79.394 million of the 6 1/8% notes under the offer, $66.964 million of the 7 3/8% notes and $80.805 million of the 6.9% debentures (the figures represent a revision of the similar figures issued o July 25). It issued $230.203 million of new 9% notes due 2012 to noteholders who had tendered in the exchange offer, and also paid the required consent payment to holders who tendered. It further said that no amendments were made to the indentures governing the existing notes, consistent with the company's previously announced intention to forego amending the notes' indentures.

AS PREVIOUSLY ANNOUNCED, J. C. Penney, a Plano, Tex.-based department store operator, said on June 26 that its J.C. Penney Corp. Inc. operating subsidiary would exchange the new debt for the three series of existing bonds, with the new notes to be issued by the operating subsidiary, with the corporate parent company acting as the co-obligor. J.C. Penney said it would offer $1,015.15 principal amount of the new notes per $1,000 principal amount of the existing 6 1/8% notes and 6.90% debentures, and would offer $1,010.10 of the new notes per $1,000 principal amount of the 7 3/8% notes. The exchange would be done as a private placement open only to investors inside the U.S. who qualified institutional buyers or institutional accredited investors, and outside the United States to non-U.S. persons, as defined by the Securities Act of 1933. The company initially said the exchange offer would expire at 5 p.m. ET on July 24, although that deadline was subsequently extended. Penney further said that concurrently with the exchange offer, it would solicit noteholder consents for certain amendments to the existing notes' indentures, and would offer a consent payment of $10 per $1,000 principal amount tendered to holders who validly tendered their existing notes and delivered their consents on or prior to the consent payment deadline of 5 p.m. ET on July 10, which was subsequently extended.

The retailer said the exchange offer and the related consent solicitation would be subject to the receipt of valid and unrevoked tenders and consents representing more than two-thirds of the outstanding principal amount of each series of existing notes (this requirement was subsequently waived), as well as other customary conditions, which would have to be met or waived by J.C. Penney. The company further said that the new notes have not been registered [for unlimited public trading] under the Securities Act, and could not be offered or sold in the U.S. absent registration or an applicable exemption from registration requirements. J.C. Penney said it planned to enter into a registration rights agreement under which it would agree to file an exchange offer registration statement for the new notes with the Securities and Exchange Commission.

On July 11, J.C. Penney said that it had modified the terms of the exchange offer, waiving the requirement that it receive consents representing more than two-thirds of the outstanding amount of each series notes as a condition to consummation of its exchange offer. As a result, it said, valid and unrevoked tenders of the existing notes made by the original July 10 consent deadline had been accepted and had become irrevocable, while holders tendering notes any time up till the expiration of the offer would not be entitled to any withdrawal rights, except under the circumstances spelled out in the official Offering Memorandum and Consent Solicitation Statement dated June 26. In addition, the company said that the minimum tender amount of $250,000 described in the Offering Memorandum (but which was not otherwise publicly announced at the time the offer began) would not apply to any subsequent tenders made by Rule 144A qualified institutional buyers or non-U.S. persons participating in the exchange through "offshore transactions," all as defined by the 1933 Securities Act. However, the $250,000 minimum tender amount would continue to apply to institutional accredited investors participating in the exchange offer, as defined by the Act, unless they were to fall into one of the foregoing categories. Penny said that it was extending the consent payment deadline until 5 p.m. ET on July 24 from the originally announced July 10 deadline (the consent deadline would thus coincide with the originally announced expiration deadline for the offer). The company said that as a result of the waiver described above, consent payments will be made in for valid and unrevoked consents regardless of whether or not the amendments to the outstanding notes' indentures being sought by the company were consented to by holders of the requisite principal amount of notes of such series.

Penney finally said that if valid and unrevoked consents to the proposed applicable amendment were to be received from the holders of two-thirds of the outstanding amount of any series of the notes subject to the exchange offer and consent solicitation, the company planned to execute a supplemental indenture covering that series of notes promptly after the exchange offer expiration date. However, it added, any such amendment would not be executed or become operative unless and until J. C. Penney were to receive valid consents representing two-thirds of the outstanding notes in the series and were to accept for payment the notes of such series for which valid and unrevoked tenders and consents had been received. As a result of the waiver of the exchange offer condition described above, it said, it would be possible that upon completion of the exchange offer, fewer than two-thirds of the outstanding amount of each series of notes subject to the exchange offer and consent solicitation might have been exchanged for new notes and, furthermore, the exchange offer might be completed without the proposed amendments becoming effective.

On July 25, J. C. Penney announced that it was extending its exchange offer and consent solicitation until 5 p.m. ET on Aug. 7. Penney said at that time that as of the original July 24 expiration deadline, the tenders of $90.469 million of the 6 1/8% notes, $64.402 million of the 7 3/8% notes and $72.094 million of the 6.9% debentures due 2026 had been accepted and had become irrevocable. It said that the company would issue in excess of $230 million principal amount of the new 9% notes on July 26, and would pay the required consent payment to the holders who made such tenders. Penney added that it does not at this time intend to execute supplemental indentures amending the indentures governing the outstanding notes. Mellon Investor Services LLC (banks and brokers contact Grainne McIntyre at: 917 320-6286 or toll-free at 800 957-3110) was the information agent.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.