TEMPLE-INLAND INC. (TIN) (Baa2/BBB) said Friday (March 1) that it has successfully completed its previously announced tender offer and related consent solicitation related to the 9 3/8% and 9¾% senior notes due 2007 and the 9 7/8% senior subordinated notes due 2008 of GAYLORD CONTAINER CORP. (GCR) (senior at Caa2/CCC+; subordinated at Caa3/CCC), which was undertaken as part of Temple Inland's acquisition of Gaylord. The tender offer expired as scheduled at midnight ET on Feb. 28, with no further extension. As of the expiration, holders of $198.668 million of the 9 3/8% notes (99.3% of the outstanding amount), $221,642,500 of the 9¾% (98.5% of the outstanding amount) and $209.095 million of the 9 7/8% (83.6% of the outstanding amount) had been validly tendered and not withdrawn. Temple-Inland accepted for purchase all such notes. The company also said that a separate tender offer for all of Gaylord's outstanding shares was simultaneously completed, with 48,323,652 shares (including 813,537 shares subject to guaranteed delivery) had been tendered by the expiration deadline and were accepted for purchase. Payment for the notes and shares is to be made as promptly as practicable. Temple-Inland plans to complete its acquisition of Gaylord by holding a special shareholders meeting, at which it will solicit the votes of at least two-thirds of the shares to confirm Gaylord's merger into a Temple-Inland subsidiary. Since Temple-Inland and its subsidiaries will already own a sufficient number of shares to approve the merger and will vote all of their shares in favor of approval, the company will require the votes of no other stockholder to effect the merger. AS PREVIOUSLY ANNOUNCED, Temple-Inland, an Austin, Tex.-based maker of packaging materials, said on Jan. 21 that it had launched a new tender offer for the outstanding Gaylord 9 3/8%, 9¾%, and 9 7/8% notes, and also launched a new tender offer for Gaylord's common shares, as part of a renewed effort to acquire Gaylord, a Deerfield, Ill.-based packaging materials maker, which agreed to the revised bid terms (Temple-Inland had announced Sept. 28 that it would acquire all of Gaylord's outstanding junk bond debt and its shares in order to acquire the company in a $786 million deal, but it was forced to admit on Jan 8 that the planned acquisition would not take place due to a lack of participation by the noteholders and the resulting failure to meet the minimum tender condition). In its Jan. 21 announcement of the new tender offer, Temple-Inland said the stock and debt tenders would be cross-conditional, and would expire on Feb. 19, although the deadline was subsequently extended. Assuming that all shares and notes were tendered, the total consideration for the transaction would be approximately $847 million, consisting of about $65 million to acquire the Gaylord shares at $1.17 per share, and around $782 million to acquire all of the notes, and to satisfy Gaylord's outstanding bank debt and other senior secured debt obligations. Temple-Inland said one of its subsidiaries was tendering for the public debt and soliciting noteholder consents to proposed indenture changes that would eliminate certain restrictive covenants and other contractual obligations of Gaylord. It set a purchase price of $900 per $1,000 principal amount for Gaylord's 9 3/8% and 9¾% senior notes and $400 per $1,000 principal amount for Gaylord's 9 7/8% notes, an increase from the prices it offered in its earlier tender offer, which was allowed to expire on Jan. 7 due to lack of sufficient noteholder participation. Except for the increased noteholder consideration, the material terms of the new offer are essentially unchanged from those of the previous offer. The merger deal is contingent upon, among other things, Temple-Inland getting at least 90% of each series of the outstanding bonds and two-thirds of the outstanding Gaylord shares (although the minimum-tender requirement was subsequently lowered for the 9 7/8% notes), as well as regulatory approval and the satisfaction or waiver of customary closing conditions. In announcing the revised tender offers and the new merger agreement on Jan. 21, Temple-Inland also noted that the transaction - just like the previous merger arrangement had been - would not be conditioned upon financing, since Temple-Inland had received a financing commitment from Citibank, NA, to fund its offer for all outstanding Gaylord shares and the notes, as well as to satisfy the bank debt and other senior secured debt obligations, and pay costs and expenses associated with the transaction. On Jan. 31, Temple-Inland said that as of 5 p.m. ET on Jan. 30, it had received tenders and the accompanying consents to proposed indenture changes from the holders of at least a majority of all three series of the Gaylord notes being tendered for. It said that with the consent condition of the offer having now been met, and the notes' withdrawal deadline having passed, any notes which have been tendered or which may be tendered may not be withdrawn, and it added that the originally announced minimum note tender condition of the tender offer had not yet been achieved at that time. Gaylord said it intended to immediately execute supplemental indentures for the notes implementing the planned amendments, although these will not become operative until all of the validly tendered notes are purchased in the tender offer. The supplemental indentures also provide for a specific waiver of any change-of-control provisions in the indentures; the waivers for each respective note series will become operative immediately upon execution of the supplemental indentures. On Feb. 22 Temple-Inland announced that amended the terms of the offer to lower the minimum note tender condition for the 9 7/8% notes to 82.6% of the aggregate principal amount of the outstanding notes, from 90% earlier, and had extended the offer, which was to have expired on Feb. 21, to midnight ET on Feb. 28. Temple-Inland further said that it had been advised by the depositary for the offer that as of 6 p.m. ET on the previous expiration date, noteholders had tendered $206.668 million of the 9 7/8% notes, or 82.6% of the outstanding amount; with the lowering of the minimum tender requirement for the notes, as outlined, all of the minimum note tender conditions of the offer had been fulfilled, since the depositary also reported that $198.637 million of the 9 3/8% notes, or approximately 99.3% of the outstanding amount, had been tendered by the old Feb. 21 deadline, as had been $221,642,500 (approximately 98.5%) of the outstanding 9¾% notes, both in excess of the minimum tender condition. Temple-Inland also said that 46,322,493 Gaylord shares, or 82.7% of the amount outstanding, had been tendered under a separate but concurrent equity tender offer, exceeding the two-thirds minimum tender threshold. Deutsche Banc Alex. Brown and Rothschild Inc., acted as financial advisors to Gaylord. Reprising roles they filled during the original debt tender offer, Salomon Smith Barney Inc. (800 558-3745) was the dealer/manager for Temple-Inland in connection with the tender offer for the notes. The information agent was D. F. King & Co., Inc. (bankers and brokers call 212 269-5550; all others call 800 549-6650). Computershare Trust Co. of New York was the depositary.

AFTERMAKET TECHNOLOGY CORP. (ATAC) (B2/B) said March 1 said that it has been informed that its majority stockholder, Aurora Equity Partners, and the other stockholders who had considered selling shares in the company's proposed public offering - the proceeds of which had been intended to be used to redeem some or all of its outstanding 12% senior subordinated notes due 2004 - have elected not to participate at the current market price. Aftermarket said that subject to improved market conditions in the coming week, it will continue to pursue a primary offering of shares of its common stock, but is also concurrently pursuing financing alternatives that it feels "may prove to be more attractive as a means of achieving its original objective of redeeming all or a portion of its 12% senior notes." Aftermarket Technology said it had initiated discussions with lenders to supplement its credit facility so as it keep it on track toward redeeming the 12% notes. AS PREVIOUSLY ANNOUNCED, Aftermarket Technology, a Westmont, Ill.-based high-tech and electronics manufacturer, said Dec. 20 that it had filed a registration statement with the Securities and Exchange Commission, for a proposed public offering totaling 6 million shares of its common stock. The company said it expected to use the net proceeds from the sale of shares to purchase or redeem a portion of the its 12% notes (the amount of notes estimated outstanding is thought to be $160 million, issued in two tranches as "Series B" ($120 million in Feb. 1995) and "Series C" ($40 million in May, 1995). ATAC did not outline a timetable for either the stock sale or the note redemption. Of the shares to be sold, 2.4 million will be offered by the company and 3.6 million by certain stockholders. In addition, the selling stockholders propose to grant to the underwriters an option to purchase up to 900,000 additional shares of common stock for the purpose of covering over allotments, if any. On Feb. 11, Aftermarket Technology said that it had entered into an agreement with a new credit facility with a group of banks led by JPMorgan Chase and Credit Suisse First Boston. The company said part of the $170 million term loan component of the $220 million facility (the remainder is $50 million of revolving credit) will be used to redeem or repurchase a portion of Aftermarket's 12% subordinated notes due 2004, with the rest of the term loan proceeds to be used to retire the company's current senior credit facility. The balance of the subordinated notes will be redeemed or repurchased from the proceeds of the company's previously announced public stock offering. The company gave no timetable for the expected redemption or repurchase of the subordinated notes. Morgan Stanley is the lead manager for the stock offering, while Merrill Lynch & Co. is the co-manager.

MPOWER HOLDING CORP. (MPWR) (C/C) said Thursday (Feb. 28) that it had begun soliciting the consent of the holders of its 13% senior notes due 2010 in connection with its previously announced proposed recapitalization plan. It set March 20 as the solicitation deadline. The company said the solicitation will give each of the noteholders the opportunity to enter into a voting agreement with the Mpower to support its proposed recapitalization plan announced on Feb. 25. Subject to the terms and conditions of the solicitation, noteholder who signs a voting agreement in support of the proposed plan by the end of the solicitation period will receive a consent fee equal to their pro- rata share of $19 million in cash (5% of the outstanding amount of the 13% notes). AS PREVIOUSLY ANNOUNCED, Mpower Holding Corp., a Rochester, N.Y.-based facilities-based broadband communications provider, said on Feb. 25 that it had reached agreement with an informal committee representing the holders of approximately 66% of the $380.5 million of outstanding 13% notes on a comprehensive recapitalization plan that would eliminate a significant portion (approximately 92%) of Mpower's long-term debt and all of its preferred stock. Under the proposed recapitalization plan, Mpower will use $19 million of its approximately $150 million cash on hand and will issue common stock to eliminate $583.4 million in debt and preferred stock, as well as the associated $50 million of annual interest expense related to the senior notes and the $15 million in annual dividend payments on the preferred stock. With holders of 66% of the notes already in accord on the company's intentions, Mpower said it would solicit the consent of the remaining noteholders. If, at the end of the solicitation period, holders of at least two-thirds of the outstanding notes have entered into the voting agreement with the company in support of the proposed recapitalization plan, Mpower intends to implement its proposed recapitalization plan by promptly commencing a voluntary pre-negotiated Chapter 11 proceeding. During the Chapter 11 proceeding, Mpower plans to continue to provide customers with its complete range of services. Mpower said it expects no significant impact on its employees, customers or suppliers. Due to what it termed its "significant" cash resources, the company does not require debtor-in-possession financing and expects to complete the recapitalization within 90-120 days of the filing of the Chapter 11 proceeding. As part of the Chapter 11 proceeding, Mpower will be required to file a plan of reorganization with the bankruptcy court, and must receive the requisite votes and be confirmed by the court. Pursuant to the proposed recapitalization plan, the 13% noteholders would receive 85% of the common stock of the recapitalized company issued and outstanding on the effective date of the plan, and would be entitled to nominate four members to the reorganized company's seven-member Board of Directors. If accepted by holders of at least two-thirds in amount of the issued and outstanding shares of preferred stock that vote on the plan, Mpower's recapitalization plan also would provide the company's preferred and common stockholders with approximately 15% of the common stock of the recapitalized company on the effective date of the plan of reorganization, and the preferred stockholders would be entitled to nominate one director to the Board of Directors. The information agent for the noteholder consent solicitation is D.F. King & Co., Inc. (contact Edward McCarthy toll free at 800 714-3305 or collect at 212 269-5550).

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