Dimon seeks consents from 9 5/8% and 7¾% noteholders

New York, Oct. 12 - Dimon Inc. said it has begun soliciting consents from the holders of two series of notes to a proposed waiver of certain technical defaults under their indentures. The company is also seeking amendments to the notes' indentures confirming the company's ability to pay future dividends at the current rate to holders of Dimon's common stock and to make additional investments in certain majority-owned subsidiaries.

The waivers and indenture amendments would affect Dimon's $200 million of outstanding 9 5/8% senior notes due 2011 and its $125 million of 7¾% senior notes due 2013.

Dimon set a record date for the solicitation of Oct. 8. It said that the consent solicitation will expire at 5 p.m. ET on Oct. 22, subject to possible extension.

Dimon, a Danville, Va.-based dealer of leaf tobacco - second-largest in the world, with operations in more than 30 countries - said it will pay noteholders who deliver consents by the deadline a consent fee of $5 per $1,000 principal amount of notes. Dimon expects that any costs incurred to obtain the consents and waivers will be amortized over the remaining maturities of the applicable debt.

The consent solicitation will be conditioned upon the company's receipt of consents from holders of at least a majority of the outstanding principal amount of each series of notes, as well as other customary conditions.

Dimon said that the technical defaults for which it is seeking waivers from the noteholders relate to the company's determination of amounts available to make certain "restricted payments," as defined by the notes' indenture - specifically, four dividend payments on the company's common stock made since December 2003, and investments in a majority-owned subsidiary during the same period.

It said that it initially interpreted the indentures as permitting it to pay common stock dividends and make investments in this subsidiary, provided that there was sufficient availability in the "restricted payments basket," described in the indentures, and provided that that it was able to take on additional debt under various "permitted indebtedness baskets" described in the indentures.

The company subsequently determined that the indentures actually prohibit these "restricted payments" if a more stringent consolidated interest coverage test is not satisfied.

Dimon further explained that it is undertaking the consent solicitation to waive any violations of the indentures related to these payments and to confirm its ability to pay future dividends and to make up to $2 million of additional investments in majority-owned subsidiaries before Dec. 31, 2005, in compliance with the indentures. It said that dividends exceeding the current amount and investments in non-wholly owned subsidiaries exceeding $2 million would remain conditioned on the company's ability to meet the consolidated interest coverage ratio test in the indentures of its notes.

Dimon also said that it is seeking waivers of cross-defaults under its $150 million credit facility and some of its subsidiaries' operating lines of credit. The effectiveness of the consents from the noteholders is conditioned upon Dimon getting waivers from the required lenders under the credit facility, and such operating lines of credit or other cures of the cross defaults.

Wachovia Securities is the solicitation agent for the consent and waiver solicitation (contact the Liability Management Group at 704 715-8341 or toll-free at 866 309-6316). D.F. King & Co. Inc. is the information agent (call 212 269-5550).

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