Ainsworth Lumber ups price in tender for 13 7/8% and 12½% notes

New York, Feb. 26 - Ainsworth Lumber Co. Ltd. (B1/B+) said that it had increased the price it is offering to the holders of its outstanding 13 7/8% senior secured notes due 2007 and its outstanding 12½% senior secured notes due 2007, under the company's previously announced tender offer for all of the notes and the related consent solicitation.

Ainsworth said that it is now offering total consideration of $1,171.25 per $1,000 principal amount of 13 7/8% notes tendered by the consent deadline and with consents to proposed indenture changes delivered (up from $1,168.75 per $1,000 principal amount originally announced) and total consideration of $1,290 per $1,000 principal amount of 12½% notes (up from $1,275 per $1,000 principal amount originally). The total consideration includes a $20 per $1,000 principal amount consent payment in each case.

Holders tendering their notes after the consent deadline but before the offer expiration will now receive $1,151.25 per $1,000 principal amount of 13 7/8% notes (up from $1,148.75 per $1,000 principal amount originally) and $1,270 per $1,000 principal amount of 12½% notes (up from $1,255 per $1,000 principal amount originally), but will not receive any consent payment.

All other terms and conditions of the tender offer - which began on Feb. 17 and for which Goldman Sachs serves as exclusive dealer manager - are unchanged.

As previously announced, Ainsworth Lumber, a Vancouver, B.C.-based forest products firm, is tendering for the 13 7/8% notes and 12½% notes via two different methods.

In an announcement on Feb. 6, Ainsworth said that a pair of previously begun tender offers for the two series of notes, required by the terms of the notes' respective indentures because the company had a specified amount of excess cash (as defined by the indentures) at the end of a fiscal quarter, had been extended to 5 p.m. ET on Feb. 26, from the previous deadline of 5 p.m. ET on Feb. 5.

Ainsworth said that under those two tender offers, it was tendering for up to $53.625 million total principal amount of the 13 7/8% and 12½% notes at a purchase price of $1,060 per $1,000 principal amount.

It said that questions regarding the offer to purchase the 13 7/8% notes should be directed to The Bank of Nova Scotia Trust Co. of New York at 212 225-5427. Questions regarding the offer to purchase the 12½% notes should be directed to The Bank of New York at 212 815-3738.

On Feb. 17, Ainsworth said that it had begun tendering for all of its outstanding 13 7/8% and outstanding 12½% notes and was soliciting noteholder consents to proposed changes in the notes' indentures.

The company set a consent deadline of 12 a.m. ET on Feb. 27 and said the tender offer would expire at 12 a.m. ET on March 16, with both deadlines subject to possible extension.

The company said it was tendering for all $89.085 million of the 13 7/8% notes outstanding (out of $95 million issued in December 2001) and for all $184.6 million of the 12½% notes outstanding (out of $225 million issued in July 1997).

Taken in conjunction with the previously announced partial tender offer being conducted under the excess-cash provision, noteholders were essentially given a choice under which tender offer to tender into, with the later tender offer taking out any notes remaining outstanding after the conclusion of the earlier tender offer.

Under the original terms of the later render offer (which were subsequently increased), Ainsworth said it would pay total consideration of $1,168.75 per $1,000 principal amount of 13 7/8% notes tendered and accepted for purchase and $1,275 per $1,000 principal amount of 12½% notes to holders tendering their notes by the consent deadline and thus consenting to the proposed indenture changes, which would eliminate substantially all of the covenants and certain events of default, and discharge and release the related security documents. It said that total consideration for each series of notes includes a $20 per $1,000 consent payment.

Ainsworth originally said that holders tendering their notes after the consent deadline but before the offer expiration would receive $1,148.75 per $1,000 principal amount of 13 7/8% notes and $1,255 per $1,000 principal amount of 12½% notes, but no consent payment.

Ainsworth Lumber said that it planned to fund the later tender offer and consent solicitation for the notes using the anticipated proceeds from its upcoming Rule 144A sale of up to $200 million of new senior notes, as well as excess cash on its balance sheet. The tender offer would be conditional on the completion of the offering of the new senior notes.

Goldman, Sachs & Co. is the exclusive dealer manager and solicitation agent for the later tender offer for the remaining notes, which is scheduled to expire on March 16 (call 800 828-3182 or collect at 212 357-3019). For documentation on the new tender offer and consent solicitation, Global Bondholder Services Corp. is the information agent (866 389-1500 or collect at 212 430-3774).

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