US Industries starts exchange for notes, obtains agreement to extend bank debt

New York, Sept. 9 - U.S. Industries, Inc. announced an exchange offer for its 7 1/8% senior notes due 2003, offering new securities with a higher interest rate and longer maturity.

The West Palm Beach, Fla. company also said it has obtained agreement from lenders holding a majority of its bank debt to extend the maturity to Oct. 1, 2003 from Nov. 30, 2002. The change is subject to conditions including execution by all lenders under the facility.

U.S. Industries said that through asset sales and measures to address working capital it has reduced its total net debt and letters of credit outstanding to $602 million, down $751 million since June 30, 2001. The figures include anticipated proceeds from the sale of SiTeco Holdings GmbH which is expected to close by the end of September.

The company currently has $250 million of the 2003 notes outstanding.

In the exchange, U.S. Industries is offering new notes with a 9 1/8% coupon, 200 basis points higher than the existing rate, and a maturity date of Dec. 31, 2005, a little over two years later than the existing notes.

Holders will receive cash and principal amount of new notes equal to the principal amount of the existing notes. U.S. Industries said it expects to distribute a total of $110 million in cash of which $89.3 million is currently on deposit in a cash collateral account. The remaining $21 million will come fro mthe SiTeco sale.

As part of the exchange, U.S. Industries is also soliciting consents from noteholders to amend the indenture of the 2003 notes so that the cash deposited in a cash collateral account from the sales of U.S. Industries' non-core assets that is proportionally allocable to tendering holders may be used to pay the cash part of the exchange offer. It will make a consent payment of $5 per $1,000 principal amount of 2003 notes from general working capital to holders who deliver their consents on or before the consent date.

The exchange is subject to 90% of current noteholders participating, a majority of noteholders backing the amendment in the consent solicitation and a successful modification of the bank debt.

The exchange runs through midnight ET on Oct. 4 unless extended. The deadline to receive the consent payment is midnight ET on Sept. 20 or when the holders of a majority of the notes deliver their consents, whichever is later.

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