Atrium wraps successful exchange offer, consent solicitation for ACIH's 11½% discount notes

By Jennifer Chiou

New York, Oct. 16 - Atrium Corp. said it successfully ended its private offer to exchange any of the 11½% senior discount notes due 2012 issued by ACIH, Inc. in a private placement for new 15% senior subordinated notes due 2012 to be issued by Atrium Cos., Inc.

In connection with its restructuring plan, the company noted that all prior defaults under the companies' various debt instruments were either waived or cured.

As part of the restructuring, holders of 97.4% of ACIH's 11½% notes exchanged their notes for new 15% senior subordinated notes of Atrium Cos. and warrants to purchase equity of Atrium Corp., and all of the holders of Atrium Co.'s existing senior subordinated notes exchanged such notes for new 11% senior subordinated notes.

The new notes will not require the payment of cash interest until December 2011.

Also linked to the restructuring, Kenner & Co., Inc. and its affiliates invested $50 million of additional equity, $40 million of which was used to permanently pay down amounts outstanding under Atrium Co.'s senior credit facility.

The offer ended at 5 p.m. ET on Oct. 10, previously pushed back from 5 p.m. on Sept. 23.

As of the old expiration date, holders had tendered $169.435 million, or 97.4%, of the $174 million of notes. One condition to the offer was that at least 97% of the notes be tendered.

A previous amendment clarified and provided details as to how Atrium Corp. will distribute, after all debt and other liabilities have been paid, equity proceeds in the event of a sale, merger, liquidation, winding down or dissolution of Atrium Corp. or other liquidation event for cash or stock to holders of its equity securities, including holders of Atrium Corp.'s series B and series C preferred stock.

As announced on Aug. 22, holders who exchange also received warrants to purchase shares of Atrium's series C preferred stock. The preferreds will be convertible into 10% of Atrium's common stock on a fully diluted basis at an exercise price of $0.01 per share.

For each $1,000 principal amount of 11½% notes, holders who exchanged received accrued interest, $1,000 principal amount of the new 15% notes and a ratable share of the warrants.

In connection with the offer, ACIH was soliciting consents for amendments to the 11½% note indenture to eliminate or amend substantially all of the restrictive covenants and to modify some of the events of default and other provisions. ACIH was also asking holders to waive any claims they may have arising from prior non-compliance by ACIH with any of the indenture terms.

Tendering into the exchange offer constituted an approval of the amendment and waiver.

Atrium said the offer was only being made to qualified institutional buyers inside the United States and to people who are not "U.S. Persons" in an "offshore transaction" as defined in Regulation S under the Securities Act of 1933.

Mackenzie Partners, Inc. (800 322-2885) was the information agent.

Atrium manufactures residential windows and doors and is based in Dallas.

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