Ascent, Monitronics offer to exchange latter’s 9 1/8% notes for notes, cash, warrants

By Wendy Van Sickle

Columbus, Ohio, Aug. 30 – Ascent Capital Group, Inc. and wholly owned subsidiary Monitronics International, Inc. launched an offer to exchange Monitronics’ existing $585 million of 9 1/8% senior notes due 2020 for cash and/or new notes and warrants to purchase Ascent’s series A common stock, according to a press release.

The offerors are offering up to $100 million in cash from Ascent and/or a combination of $585 million of new Monitronics’ 7¾%/3¾% senior unsecured cashpay/PIK Notes due 2023 and, for each $1,000 principal amount of old notes accepted in the exchange offer, one warrant entitling the holder to purchase 2.64 shares of Ascent’s series A common stock at an exercise price of $5.00 for each whole share.

Assuming the exchange offer is fully subscribed at the high end of the price range in the Dutch auction exchange – $750 to $875 per $1,000 of old notes – prior to the early tender time and the cash consideration cap is reached, holders would receive warrants to purchase up to 1,243,117 shares of Ascent stock, representing 10% of the total shares of Ascent series A and series B common stock outstanding immediately prior to the launch of the exchange offer and a related consent solicitation.

The early tender time is 5 p.m. ET on Sept. 13, which is also the deadline to withdraw tenders and revoke consents.

The offer will expire at 11:59 p.m. ET on Oct. 3.

Dutch auction exchange

For each $1,000 principal amount of old notes tendered by holders who participate in the Dutch auction prior to the early tender time, who do not elect to receive solely the early securities consideration [$1,000 of new notes and one warrant] and who specify a bid price lower than the clearing price, holders will receive a cash-only consideration from Ascent equal to the clearing price for each $1,000 principal amount of old notes.

Holders who specify a bid price that is equal to the clearing price will receive the cash consideration for old notes accepted by Ascent and, to the extent the cash consideration payable under this clause would exceed the cash consideration cap, new notes equal to the principal amount of old notes and one warrant per $1,000 principal amount of old notes for all old notes that are accepted by Monitronics and not purchased by Ascent in the Dutch auction, on a pro rata basis.

Holders who participate by the early deadline and specify a bid price that is above the clearing price will receive only the early securities consideration of $1,000 of new notes and one warrant for all old notes that are accepted by Monitronics.

To the extent any cash consideration remains unallocated to participating holders who tendered prior to the early tender time and did not elect to receive solely the early securities consideration, participating holders who tender after the early tender time but prior to the expiration time and do not elect to receive solely the late securities consideration [$950 of new notes and one warrant] at a bid price at or below the clearing price will receive, on a pro rata basis among such late tenders, a cash consideration from Ascent equal to the clearing price less $50 for each $1,000 of old notes accepted by Ascent, subject to the cash consideration cap, and a combination of new notes and warrants equal to the early securities consideration less $50 principal amount of new notes for each $1,000 of old notes that are accepted by Monitronics and not purchased by Ascent in the Dutch auction.

To the extent no cash consideration remains unallocated to participating holders who tendered prior to the early tender time and did not elect to receive solely the early securities consideration, participating holders who tender after the early tender time but prior to the expiration time will receive only the late securities consideration for all old notes that are accepted by Monitronics.

To the extent the cash consideration cap is fully or over-subscribed as of the early tender time, the offerors will allocate all of the cash consideration to holders who have validly tendered and not withdrawn old notes as of the early tender time and who do not elect to receive solely early securities consideration, and holders who validly tender and do not withdraw old notes after the early tender time and on or prior to the expiration time will be eligible to receive only late securities consideration.

Consent solicitation

In connection with the exchange offer, Monitronics is soliciting consents from holders of old notes to some proposed amendments.

The proposed amendments would eliminate or waive substantially all of the restrictive covenants, eliminate certain events of default and modify or eliminate certain other provisions, including provisions relating to the obligations of the offerors’ future subsidiaries to guarantee the old notes, the designation of unrestricted subsidiaries and defeasance.

If the amendments are adopted, Monitronics plans to transfer a majority of its assets, which will include a majority of its primary revenue generating contracts, to subsidiaries that guarantee or will guarantee the new notes but will be designated as “unrestricted” under the old notes indenture and which would therefore not guarantee the old notes. The old notes will thus become structurally subordinated to all debt and other obligations of such subsidiaries that do not guarantee the old notes.

Holders who tender their old notes into the exchange offer will be deemed to have submitted their consents.

Consummation of the exchange offer is contingent upon some conditions, including the receipt of consents representing at least a majority in principal amount of old notes.

The offerors will not receive any cash proceeds from the exchange offer, the consent solicitation or the issuance of the new notes and the warrants in connection with the exchange offer.

The new notes will be fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of Monitronics’ restricted subsidiaries, including all of Monitronics’ subsidiaries that own any of its material assets.

The new notes and the warrants will not be registered under the Securities Act of 1933. However, Monitronics has agreed to enter into a registration rights agreement to consummate an exchange offer or register the reoffer and resale of the new notes at a later time.

D.F. King & Co., Inc. (212 269-5550, 877 674-6273 or monitronics@dfking.com) is the exchange agent for the exchange offer and the information agent for the exchange offer and the consent solicitation.

Monitronics is a Dallas-based home security alarm monitoring company. Ascent Capital is a holding company based in Englewood, Colo.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.