Southern Star gets consents, tenders for 98.29% of 8½% notes, 88.65% of 7 3/8% notes, sets pricing

By Angela McDaniels

Seattle, April 6 - Southern Star Central Corp. has received consents and tenders from holders of 98.29%, or $176,915,000, of its 8½% senior secured notes due 2010 and holders of 88.65%, or $155,135,000, of the 7 3/8% senior notes due 2006 issued by wholly owned subsidiary Southern Star Central Gas Pipeline Inc.

The company also announced pricing, saying it will pay $1,078.11 per $1,000 principal amount for the 8½% notes $1,013.03 for the 7 3/8% notes.

Both prices include the consent payment.

Pricing was fixed at 2 p.m. ET on April 6.

Southern Star began a tender offer for the notes and a consent solicitation to amend the indentures governing the notes to eliminate substantially all of the covenants and certain events of default on March 24.

The consent deadline was 5 p.m. ET on April 5, and the tender offer will expire at 11:59 p.m. ET on April 20, unless extended.

For each $1,000 principal amount of 8½% notes, the company said it will pay the present value of $1,042.50 - the amount payable on the notes on Aug. 1, 2007, the first call date - plus interest to the call date, discounted using the yield to maturity of the 3 7/8% Treasury due July 31, 2007 plus 50 basis points.

For each $1,000 principal amount of 7 3/8% notes, Southern Star Central Gas Pipeline will pay the present value of $1,000 - the amount payable on the notes at maturity on Nov. 15, 2006 - plus interest up to maturity, discounted using the yield to maturity of the 3.5% Treasury due Nov. 15, 2006 plus 15 bps.

In both cases, accrued interest up to but excluding the purchase date will be subtracted.

Those who tendered their securities by the consent deadline will receive the $30.00 consent payment included in the payout.

Each offer is conditioned upon proceeds of a new debt financing by Southern Star or its subsidiary. The tender offers are not conditioned on each other.

The tender for the 8½% notes was conditioned on the receipt of tenders from holders of at least 90% of the notes and the companies obtaining consents from holders of at least a majority of 7 3/8% notes.

Lehman Brothers Inc. (800 438-3242 or call collect 212 528-7581) and Credit Suisse Securities (USA) LLC (800 820-1653 or call collect 212 538-0652) are the dealer managers and solicitation agents. D. F. King & Co., Inc. (800 758-5378 or call collect 212 269-5550) is the information agent.

The Owensboro, Ky., company owns Southern Star Central Gas Pipeline, Inc., an interstate natural gas company.

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