AES closes senior notes offer with $1.1 billion tendered

New York, May 15 - The AES Corp. said that its previously announced tender offer for five series of its senior notes had expired as scheduled at 8 a.m. ET on May 15, with no further extension, and said that it had purchased approximately $1.1 billion face amount of senior notes for approximately $997 million.

AES purchased $43.797 million principal amount of the $54.576 million principal amount of its 8% Series A senior notes due 2008, out of the total outstanding principal amount of $199.022 million.

It purchased $161.398 million principal amount of the $198.941 million principal amount of its 8¾% Series G senior notes due 2008, out of the total outstanding principal amount of $400 million.

It purchased $252.951 million principal amount of the $313.485 million principal amount of its 9½% Series B senior notes due 2009, out of the total outstanding principal amount of $750 million.

It purchased $414.345 million principal amount of the $514.015 million principal amount of its 9 3/8% Series C senior notes due 2010, out of the total outstanding principal amount of $850 million.

And it purchased $233.504 million principal amount of the $281.546 million principal amount of its 8 7/8% Series E senior notes due 2011, out of the total outstanding principal amount of $536.690 million.

The company said that the senior notes were purchased with a portion of the proceeds of AES' private placement of $1.8 billion second priority senior secured notes, which was completed on May 8. Some of the proceeds from the private placement were also used to purchase approximately $104 million face amount of four issues of senior subordinated notes, and to repay $475 million under AES' senior secured credit facilities.

The remaining proceeds of the private placement will be used for general corporate purposes. The transactions substantially eliminate all scheduled parent maturities at AES until 2005, improve financial flexibility and parent liquidity, and lengthen the average life of AES' parent debt maturities.

Previously, the Arlington, Va.-based independent power producer announced the completion of the tender offer for the senior subordinated notes, which expired at 9.00 am. ET on May 8.

Although the company did not give a detailed breakdown of the final results, it said that as of 5.00 p.m. ET on May 7 at total of $103.78 million had been tendered: $18.915 million of its 10.25% senior subordinated notes due 2006, $40.558 million of its 8.375% senior subordinated notes due 2007, $34.643 million of its 8.50% senior subordinated notes due 2007 and $9.742 million of its 8.875% senior subordinated notes due 2027.

AES had originally indicated that it would sell $1 billion of bonds and spend $575 million of that on repurchasing a portion of the existing notes, at a discount from their face value. After raising the size of the bond sale to $1.8 billion, it raised the amount of each series of the senior notes which it would buy back and the total amount that it was buying, although it did not raise the amount of the subordinated notes that it was tendering for.

Citigroup (call the Liability Management Group at 800 558-3745) and UBS Warburg LLC (call the Liability Management Group at 888 722-9555, ext. 8035) were the joint dealer managers for the tender offer. Wells Fargo Bank Minnesota, NA (call 800 344-5128) was s the depositary and information agent in connection with the tender offer.

U.S. Steel completes 10¾% '08 noteholder consent solicitation

New York, May 15 - United States Steel Corp. (B1/BB-) said that its previously announced solicitation consents to proposed indenture changes from the holders of its 10¾% senior notes due 2008, expired as scheduled at 5 p.m. ET on May 13 without extension.

As of that deadline, holders of over 90% of the notes consented to the proposed indenture amendments, which therefore were approved.

As previously announced, the Pittsburgh-based steelmaker said on May 6 that it would seek the consent of the noteholders of record (as of May 6) to the indenture changes, which were aimed at amending certain provisions of the notes' indenture to make them conform to the indenture of a new $350 million issue of notes the company said it would sell in connection with the financing of its acquisition of substantially all of the assets of the bankrupt National Steel Corp. (high yield syndicate sources heard on May 14 that U.S. Steel had sold an upsized $400 million issue of new 9¾% senior notes due 2010).

U.S. Steel said that payments for the consents would be conditioned upon, among other things, the company receiving consents from holders of a majority in principal amount of the outstanding notes.

On May 13, the company said that it had increased the consent fee it would pay from the originally announced $1.25 per $1,000 of principal amount of notes for which valid consents were received and not subsequently revoked, to $2.50 per $1,000 principal amount.

JP Morgan Securities Inc. (call 212 270-7967) and Goldman, Sachs & Co. (call 212 902-6351) were joint solicitation agents for the consent solicitation; Georgeson Shareholder, (call 212 440-9800 or 800 790-4667) was the information agent.

L-3 offers new notes; proceeds to redeem 8 ½% '08 notes

New York, May 15 - L-3 Communications Holdings, Inc. (Ba3/BB-) said Wednesday that it would raise $300 million (before underwriting expenses) through the sale of new 10-year Rule 144A notes through its L-3 Communications Corp. wholly owned subsidiary, with a portion of the net proceeds of the sale to be used to redeem its outstanding $180 million of 8½% senior subordinated notes due 2008.

The New York-based maker of secure communications systems said that the rest of the proceeds would go for general corporate purposes.

High yield syndicate sources heard later Wednesday that L-3 had sold an upsized $400 million issue of new 6 1/8% senior secured notes due 2013.

Prime Hospitality bought back some 8 3/8% '12 notes

New York, May 15 - Prime Hospitality Corp. (B1) said that in the quarter ended March 31 it bought back $8 million face amount of its 8 3/8% senior subordinated notes for $7.2 million.

The Fairfield, N.J.- based lodging company said in its 10-Q quarterly filing with the Securities and Exchange Commission that it realized a gain on the transaction of $800,000.

Waterford extends tender for 9.5% senior notes

New York, May 15 - Waterford Gaming, LLC and Waterford Gaming Finance Corp. extended their tender offer and consent solicitation for all their $102.349 million outstanding 9.5% senior notes due 2010.

The tender offer will expire at midnight ET on July 11 and the consent solicitation at 5.00 p.m. ET on May 28.

The Waterford, Conn. companies said they had received tenders from holders of all the notes.

Deutsche Bank Securities Inc. (212 469-8995) and Bear, Stearns & Co. Inc. are dealer managers and solicitation agents for the offer and consent solicitation, the information agent is MacKenzie Partners, Inc. (call collect 212 929-5500, banks and brokers call 800 322-2885) and the depositary is U.S. Bank NA.

Talk America buys back $7.1 million 12% notes, repays $7.1 million 8% convertibles

New York, May 15 - Talk America said it bought back $7.1 million principal amount of its 12% senior subordinated notes due 2007 and in connection with the transaction will have prepaid $7.1 million of its 8% secured convertible notes due 2006.

The 12% notes were bought back in the open market.

The Reston, Va. communications company said it will record a non-cash gain of $0.3 million for the purchase of the 12% notes.

Its total debt is now $73.7 million.

Universal Compression starts tender for 9 7/8% notes

New York, May 15 - Universal Compression, Inc., a wholly owned subsidiary of Universal Compression Holdings, Inc. began Wednesday as tender for any and all of its $229.75 million outstanding principal amount of 9 7/8% senior discount notes due 2008.

The Houston natural gas compression services company will pay 105.35% of principal amount to holders who tender by the early tender date of 5.00 p.m. ET on May 20. After that and up to the expiration date of midnight ET on June 11 it will pay 104.938% of principal. In both cases holders will receive accrued interest up to but not including the payment date.

The tender offer is subject to a number of conditions including completion of a new senior notes offering and is expected to be financed by a combination of the new senior notes offering, excess cash and borrowings under an existing revolving credit agreement.

Universal Compression said it currently intends to call for redemption any notes not tendered at the redemption price of 104.938% of principal plus accrued interest.

Lehman Brothers (212 528-7581 or 800 438-3242, attention Emily Shanks) is dealer manager and Mellon Investor Services (866 323-8159 or 917 320-6286) is information agent.

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