Eye Care Centers plans to sell Income Units, notes; proceeds to repay bank debt, redeem notes

New York, May 7 - Eye Care Centers of America Inc. is planning an offering of Income Units and 10-year senior subordinated notes, according to an S-1 registration statement filed with the Securities and Exchange Commission.

Proceeds will be used along with available cash to repay credit facility borrowings, redeem its 9 1/8% senior subordinated notes and floating-rate subordinated term securities, redeem all its outstanding preferred stock and repurchase common stock from its existing shareholders.

The Income Units will be made up of shares of class A common stock and 10-year senior subordinated notes. After 45 days, holders of the Income Units can separate them into their components. The notes included in the units are identical to the notes that will be sold separately.

Banc of America Securities LLC and Merrill Lynch & Co. are bookrunners for the sale.

The San Antonio, Texas, optical retail chain currently has $106.75 million outstanding on its credit facility. It is made up of a revolver at Libor plus 450 basis points, a term loan A due Dec. 23, 2005 at Libor plus 425 basis points and a term loan B due Nov. 1, 2007 at Libor plus 475 basis points.

The $100 million 9 1/8% notes mature May 1, 2008. Eye Care Centers will redeem them at a price of 103.042% of par plus accrued interest.

The $50 million subordinated term notes pay interest at Libor plus 398 basis points and are redeemable at par.

As part of the transaction, Eye Care Centers also plans to obtain a new credit facility made up of a revolver and a term loan.

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