Millicom exchange offer for 13½% '06 notes successfully expires

Millicom International Cellular SA said on Monday (May 5) that its previously announced private exchange offer and consent solicitation for its outstanding 13½% senior subordinated discount notes due 2006 expired as scheduled at 5 p.m. ET on May 2 without further extension.

The company said that as of that deadline, approximately $781 million of the notes, or 85% of the outstanding amount, had been tendered in the exchange offer and their holders are thereby deemed to have consented to certain amendments to the existing indenture covering the notes.

Millicom said that upon the official closing of the exchange offer (which is expected to take place on Wednesday, May 7), it will issue approximately $562 million of new 11% senior notes due 2006 and approximately $64 million of its new 2% senior convertible PIK (payment in kind) notes due 2006 in exchange for the tendered 13½% notes, with the tendered existing notes to then be cancelled. Given that the new 2% PIK notes are convertible into Millicom common stock at a conversion price of $10.75 per share, the total amount of the 2% notes would convert into approximately 5.93 million shares of Millicom common stock (which, when issued, would constitute approximately 26.7% of the then-issued and outstanding common stock float), should all $64 million aggregate principal amount of the 2% notes be converted.

In addition, Millicom will also pay to holders of the 13½% notes who consented to the indenture amendments (excluding Millicom's affiliates) an aggregate amount of approximately $38 million, representing a $50 per $1,000 of notes tendered consent payment.

AS PREVIOUSLY ANNOUNCED: Millicom, a Bertrange, Luxembourg-based telecommunications investor, said on Jan. 21 that it had begun an offer to exchange two issues of new debt for all of the outstanding 13½% notes, and had also begun a related solicitation of noteholder consents to proposed indenture changes.

Millicom initially said that the exchange offer and consent solicitation would expire at 5 p.m. ET on Feb. 20 (this was subsequently extended).

The company initially said that holders of the existing notes validly tendering them for exchange would receive $600 of Millicom's newly issued 9% senior notes due 2005, plus $75 of Millicom's newly issued 4% senior convertible PIK notes due 2005 per $1,000 of the existing notes (this consideration for the tendered existing notes was subsequently modified, in the amount, the coupons and the maturities of the new notes to be issued).

It noted that the new 4% notes would be convertible into Millicom's common stock at any time after April 1 at a conversion price of $5 per share, which could result in a dilution to existing Millicom stockholders of approximately 22% (assuming the company issues no additional PIK notes in lieu of cash interest).

Millicom said that at their maturity or upon their redemption, the company - at its option - could pay the then-outstanding principal amount of the 4% notes in whole or in part, plus the accrued and unpaid interest on the notes, either in cash or in shares of its common stock.

Millicom said that its wholly owned Millicom International Operations BV subsidiary would irrevocably and unconditionally guarantee both the new 9% notes and the new 4% notes.

Millicom subsequently extended the exchange several times (most recently to May 2), and said that the rights of withdrawal for those bondholders who had already tendered their acceptance to the exchange offer and consent solicitation would continue until the new expiration date, in accordance with the terms of the private offering documents.

On Feb. 20, Millicom confirmed that it had been notified that an ad hoc committee of bondholders had been formed and had retained Houlihan Lokey Howard & Zukin as financial advisers and Orrick, Herrington & Sutcliffe as legal advisers. Millicom said it had conversations with this ad hoc committee, and was extending the exchange offer and consent solicitation "to facilitate the continued dialogue."

On April 11, Millicom said that it had received commitments from approximately 50% of the holders of the existing notes to exchange their securities under proposed revised terms and these terms had become binding on these holders and would no longer be subject to the completion of a due diligence review. It added that subject to the remaining members of the ad hoc committee of noteholders (representing an additional 18% of the holders) entering by April 16 into similar binding commitments to tender, Millicom had agreed to amend the terms of the exchange.

It said that under the proposed amended terms, tendering holders would stand to receive $720 of new 11% senior notes and $81.7 of new 2% senior convertible PIK notes, both due in 2006, per each $1,000 principal amount of the existing notes tendered in the offer.

The new notes, which would be guaranteed by Millicom International Operations BV, would result in a maximum dilution to existing Millicom stockholders of approximately 30%, assuming no issuance of PIK notes in lieu of cash interest.

The 11% notes would have semi-annual amortization payments due June 1, 2004, Dec. 1, 2004, June 1, 2005 and Dec. 1, 2005. The 2% convertibles would be convertible into Millicom's common stock at a price of $10.75 per share, allowing for Millicom's recent reverse stock split. At maturity or on redemption, Millicom would have the right, at its option, to pay the outstanding principal amount of the 2% notes plus accrued interest in cash or stock.

In addition, under the revised offer, Millicom would continue to solicit consents to certain amendments to the indenture of the existing notes. Millicom said it would make a consent payment of $50 per $1,000 principal amount of existing notes for which a valid consent is delivered, providing at least a majority consent.

On April 16, Millicom said 67% of the holders of the 13½% notes had given unconditional commitments to participate in the exchange offer and consent solicitation. Millicom said it adjusted the threshold required to 65% from 68% previously, and as a result had finalized the change to the exchange.

Millicom extended the exchange offer to May 2, subject to possible further extension.

Dobson buys back $60.2 million preferreds

Dobson Communications Corp. bought back $60.2 million liquidation preference of its 12.25% and 13% senior exchangeable preferred stock during the first quarter.

The company said it may continue to buy back its preferred stock or senior notes in open market or privately negotiated transactions.

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