Ascent, Monitronics scrap exchange for 9 1/8% notes, eye new deal

By Susanna Moon

Chicago, Sept. 25 – Ascent Capital Group, Inc. and wholly owned subsidiary Monitronics International, Inc. terminated their exchange offer that had been set to run until 11:59 p.m. ET on Oct. 3 in lieu of a new proposed exchange.

As announced Aug. 30, the companies were originally offering to exchange Monitronics’ $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.

The companies then announced on Tuesday that they had executed a support agreement with holders of about $386 million principal amount, or 66%, of the 9 1/8% notes to exchange the issue for new second-lien notes.

Monitronics would also solicit consents to amend the notes indenture to eliminate or waive substantially all restrictive covenants and events of default, according to an announcement.

Under the new proposal, Monitronics would aim to amend its senior secured credit facility to permit the issue of the second-lien notes and third-lien notes and to provide covenant relief for the operating business. Monitronics would also pay down $100 million principal amount of the term loans with cash funded by Ascent, and the revolving loan commitments under the credit facility would be permanently reduced by 10%.

Consenting bondholders and their affiliates own about 16% of the principal amount of the outstanding term loans under the credit facility.

Also, the companies would offer to exchange Ascent convertible notes for new third-lien notes to be issued by Monitronics.

The new proposal is not conditioned on the offer for Ascent’s convertibles; however, if the amendments to the facility are not made within the timeframe set out, the companies would make an alternate offer that does not require any amendments to the facility, the release noted.

The alternate offer would be largely similar to the exchange offer and consent solicitation that has been terminated, including the use of $100 million of cash by Ascent in connection with the acquisition of Monitronics’ notes, but the alternate offer will include changes required by the support agreement.

Originally the companies were offering up to $100 million in cash from Ascent and/or a combination of $585 million of new Monitronics’ 7¾%/3¾% senior cash/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.

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.

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