Dobson closes on credit facility, fulfills condition for 12¼% note, preferred stock tenders

New York, Oct. 23 - Dobson Communications Corp. (B3/CCC+) said that its wholly owned subsidiary, Dobson Cellular Systems, Inc., had closed on its new $700 million senior credit facility. Completion of the credit financing is a condition of both Dobson's previously announced cash tender offer for up to 250,000 shares of its 12¼% senior exchangeable preferred stock (Caa2), and for its Dobson/Sygnet Communications Co.(B3/B-) subsidiary's previously announced tender offer and related consent solicitation for Dobson/Sygnet's 12¼% senior notes due 2008.

The offer for the Dobson/Sygnet 12¼% notes was scheduled to expire at midnight ET on Oct 23, while the offer for the Dobson preferred stock was scheduled to expire at midnight ET on Oct. 30, with both tender offers subject to possible further extension.

As previously announced, Dobson, an Oklahoma City, Okla.-based provider of wireless communications services to mostly rural markets, said on Sept. 8 that its Dobson/Sygnet Communications Co. subsidiary had begun a cash tender offer for any and all of its outstanding $188.5 million of 12¼% notes, and was also soliciting noteholder consents to proposed indenture amendments.

It set a consent deadline of 5 p.m. ET on Sept. 12, and initially said the offer would expire at 5 p.m. ET on Oct. 7; the deadline was subsequently extended.

On Sept. 15, Dobson said that said that holders of the 12¼% notes had tendered a total of $183.255 million principal amount of the notes, or 97.2% of the total outstanding, as of the close of business on Sept. 12, which coincided with the now-expired consent deadline. That number did not change in several subsequent announcements that the tender offer had been extended, most recently on Oct. 22.

Dobson said that Dobson/Sygnet would pay noteholders who tendered prior to the consent solicitation expiration deadline aggregate consideration of $1,077.57 per $1,000 principal amount of notes tendered, which includes a $30 per $1,000 principal amount consent payment, and would also pay accrued and unpaid interest. Holders tendering after the consent deadline will receive $1,047.57 per $1,000 principal amount of notes, plus interest.

Dobson/Sygnet said it planned to execute a supplemental indenture that would, among other things, eliminate all events of default other than those relating to the failure to pay principal and interest on the notes. The amendments okayed by a clear majority of the noteholders would also eliminate covenants in the indenture that, among other things, have limited Dobson/Sygnet's ability to pay dividends, make distributions and certain investments, acquire or prepay junior securities, incur debt, sell assets, enter into certain transactions with affiliates and incur liens. The supplemental indenture will be operative upon consummation of the tender offer.

Dobson also said on Sept. 8 that it had begun a separate cash tender offer for up to 250,000 shares of its own 12¼% senior exchangeable preferred stock (Caa2), which, like the tender offer for the notes, was initially set to expire at 5 p.m. ET on Oct. 7 but was subsequently extended.

Dobson said it would offer cash consideration to tendering preferred stockholders of $1,061.25 per share, plus accrued and unpaid dividends up to, but not including, the settlement date, payable on the settlement date.

The company said that as of 12 midnight ET on Oct. 21, 245,842 of the preferred shares had been tendered - up slightly from the 245,832 preferred shares that had been tendered by 5 p.m. ET on Oct. 7.

The company said that the two offers would each be each subject to and conditioned upon Dobson Communications' receipt of proceeds from an offering of its debt securities and borrowings under a new senior credit facility or other financing.

(High yield syndicate sources said on Sept. 12 that Dobson had successfully sold an upsized $650 million of new 8 7/8% senior notes due 2013. Dobson had said that it would use the proceeds of the bond offering, along with those of the new $700 million credit facility to fund the $189 million note tender, the $250 million preferred stock tender and to refinance and replace outstanding borrowings under Dobson's existing credit facilities which totaled approximately $751 million as of June 30 Dobson said that it would contribute a portion of those proceeds to Dobson/Sygnet so that it can make payments pursuant to the Dobson/Sygnet tender offer).

The company said that the settlement date is expected to be promptly following the scheduled expiration date of the respective offers for the Dobson preferred shares and the Dobson/Sygnet senior notes.

Lehman Brothers Inc. is the dealer manager and solicitation agent for the offers (call collect at 212 528-7581 or toll-free at 800 438-3242). Documentation is available from Bondholder Communications Group, the offers' information agent (call 212 809-2663).

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