Arch Wireless amends 10% '07 notes indenture, continues redemptions

Arch Wireless, Inc. said on Wednesday (March 12) that that its wholly owned subsidiary, Arch Wireless Holdings, Inc., and The Bank of New York, as trustee, have entered into supplemental indentures for Arch Wireless Holdings' 10% senior subordinated secured notes due 2007 and 12% subordinated secured compounding notes due 2009.

The company said that the supplemental indentures became effective immediately upon execution; they amend certain covenants that require minimum levels of EBITDA, direct units in service, and service, rental and maintenance revenue for certain quarters through March 31, 2004. Additionally, the supplemental indenture for the 10% notes allows net cash proceeds from an asset sale to be used to repay the 10% notes on an optional redemption date, if that redemption date is earlier than the next interest payment date.

As a result, Arch also announced today that its subsidiary intends to redeem an extra $1.7 million principal amount of 10% notes on March 31, in addition to the previously announced scheduled redemption that day of $15 million of the 10% notes. Accordingly, the total principal amount of 10% notes to be redeemed on March 31, will be $16.7 million. The additional redemption amount of $1.7 million represents net cash proceeds received by Arch Wireless Holdings from the sale of certain real estate in January, and was delivered to The Bank of New York, as trustee, upon consummation of the sale, as required by the notes' indenture.

The redemption that will take place on March 31 will be the latest in a series of such transactions which have taken place since the bonds were issued last May. When the transaction is completed, the amount of 10% notes outstanding will fall to $83.3 million from the $100 million currently outstanding.

AS PREVIOUSLY ANNOUNCED, Arch Wireless - a Westborough, Mass.-based provider of wireless messaging and mobile information services - said on May 29 that its First Amended Joint Plan of Reorganization, which had been confirmed by the U.S. Bankruptcy Court for the Western Division of Massachusetts on May 15, officially became effective, thus marking the formal emergence from Chapter 11 of Arch and its subsidiaries. As part of that reorganization, Arch Wireless Holdings issued $200 million principal amount of new 10% notes and $100 million principal amount of new 12% subordinated secured compounding notes due 2009, while the parent company issued 20 million shares of new common stock. The new shares and notes were issued in full satisfaction, release, discharge and cancellation of all claims against Arch and its subsidiaries based on transactions or occurrences prior to Dec. 6, 2001. All previously outstanding equity securities, including common stock and preferred stock, and all options and other rights to acquire Arch securities were cancelled.

On July 8, Arch Wireless said that Arch Wireless Holdings had given notice of its intention to redeem $10 million principal amount of its 10% notes. Arch said that it expected to redeem the notes on July 31. It said the redemption transaction would be handled by the notes' trustee, The Bank of New York. Arch said that under terms of the notes' indenture, only holders of record as of July 16 would be entitled to receive cash distributions in connection with the redemption. Arch warned that creditors that had not yet tendered their letters of transmittal to The Bank New York in accordance with Arch's Joint Plan of Reorganization would not receive a cash distribution in connection with the redemption, unless their letter of transmittal were to be received by the exchange agent by July 15. Accordingly, Arch said it "strongly" urged all such creditors to submit their transmittal letters prior to July 15. Arch said that early redemption of that portion of the 10% notes - this in addition to recent exchange transactions undertaken as part of its overall financial reorganization - would further lower the company's interest expense and generate greater financial flexibility.

On July 31, Arch Wireless said that its subsidiary had completed the previously announced redemption, at par value, of $10 million of 10% notes, plus accrued interest. It said that with the redemption, Arch now had $190 million principal amount of the 10% notes outstanding, and said that it had given The Bank of New York notice of its intention to redeem another $15 million of the notes on Aug. 30. Only holders of record as of Aug. 15 could participate in the transaction. Arch said that creditors that had not yet tendered their letters of transmittal to The Bank New York would not be eligible to receive a cash distribution in connection with the Aug. 30 redemption unless such letters of transmittal had been received by the exchange agent by Aug. 14.

On Aug. 30, Arch Wireless said that its subsidiary had completed the previously announced redemption, at par value, of $15 million of its 10% notes, plus accrued interest. It said that with the redemption, the second in recent weeks, Arch now had $175 million principal amount of the 10% notes outstanding, and said that it had given The Bank of New York notice of its intention to redeem another $15 million of the notes on Sept. 30. Only holders of record as of Sept. 16 could participate in the transaction.

On Sept. 30, Arch said that its subsidiary had completed the previously announced redemption, at par value, of $15 million of its 10% notes, plus accrued interest. It said that with the redemption, the third in recent weeks, Arch now had $160 million principal amount of the 10% notes outstanding, having redeemed a total of $40 million of the $200 million of the notes that were originally issued. Arch did not at that time announce plans for a further redemption of the notes.

On Nov. 2, Arch said that its subsidiary had notified The Bank of New York, as trustee, of its intention to redeem, at par value, another $35 million principal amount of the 10% notes on Dec. 31, with a record date for the transaction of Dec. 16.

Arch also disclosed that the company had completed a mandatory redemption payment of $15 million, plus accrued interest, on Nov. 15, bringing the amount of the remaining outstanding notes down to $145 million from $160 million previously. It said that upon the completion of the planned $35 million redemption on Dec. 31, Arch will have redeemed $90 million of the $200 million of the bonds which were originally issued on May 29, after Arch's financial restructuring was completed. The $90 million would include the $35 million being redeemed on Dec. 31, the $15 million November redemption and the $40 million total redeemed in three separate previously announced transactions which took place in July, August and September. Following the Dec. 31 redemption, Arch said it would have $110 million of the notes remaining outstanding.

On Dec. 31, Arch said that its subsidiary had completed the previously announced redemption of $35 million of the 10% notes, bringing the amount of notes redeemed since the bonds were issued up to $90 million, and bringing the amount still outstanding down to $110 million.

On Jan. 28, Arch said that its subsidiary would redeem an additional $10 million principal amount of the 10% notes at par value on Feb. 28, a transaction that would bring the amount of outstanding notes down to $100 million from $110 million. Arch announced completion of that transaction on Feb. 28, and also said that its subsidiary was planning to redeem another $15 million principal amount of the 10% notes at par on March 31, which would further reduce the outstanding amount to $85 million when completed.

Lexington Precision amends and again extends exchange offer for 12¾% notes

Lexington Precision Corp. said on Friday (March 7) that it had amended the terms of its previously announced offer to exchange new debt, plus stock-purchase warrants and a participation payment, for its outstanding 12¾% senior subordinated notes which came due in 2000 but which were not redeemed at that time. It also extended the offer to give noteholders time to consider the changes it has proposed.

The offer, which was to have expired at midnight ET on March 7, was extended to midnight ET on March 20, subject to possible extension. As of Thursday (March 6), $27.209 million principal amount of the 12¾% notes, or 99.3% of the outstanding amount, had been tendered in the offer, approximately the same amount announced on Oct. 31 and in a number of subsequent expiration deadline extension announcements.

Lexington Precision said that under the terms of the amended exchange offer, tendering holders of the 12¾% notes will receive new 11½% senior subordinated notes due 2007, in a principal amount equal to the sum of the principal amount of 12¾% notes tendered, plus the accrued interest on those notes for the period of Aug. 1, 1999, through the day before the date the amended exchange offer is consummated (prior to the amendment, only accrued interest through April 30, 2002, was to be converted into new 11½% notes).

If the amended exchange offer is consummated on March 25, the accrued interest would total $465.3750 per $1,000 principal amount of 12¾% notes tendered (up from the previously announced $350.625 per $1,000 principal amount tendered). If all of the existing 12¾% notes are tendered, and the exchange offer is completed, $12.757 million of accrued interest will be converted into new 11½% notes (up from the previously announced $9.611 million of total accrued interest).

Interest on the new 11½% notes will accrue from the date the amended exchange offer is consummated, and will be payable quarterly on each May 1, August 1, Nov. 1, and Feb. 1 (prior to the amendment, interest on the new 11½% notes was to accrue from May 1, 2002).

Tendering holders of the 12¾% notes will also receive a participation fee equal to $30 for each $1,000 principal amount of 12¾% notes tendered. The participation fee will be payable in cash on the date the amended exchange offer is consummated (prior to the amendment, a participation fee of $22.20 per $1.00 principal amount of notes tendered was to be paid in three installments).

Lexington said the amended exchange offer is a component of a comprehensive financial restructuring plan that would also involve a refinancing of the company's senior secured credit facilities, the repurchase, at a discount, of the company's 10½% senior notes, an extension of the principal amount of the company's 14% junior subordinated notes, and a conversion of the accrued interest on the 14% notes to common stock (previously, the company had said that it intended to extend the 10½% notes rather than repurchase them at a discount, and made no mention of converting the 14% notes' accrued interest to common stock). The completion of the amended exchange offer will be subject to a number of conditions precedent, including the refinancing or retirement of all of the company's debt, other than the 12¾% notes, on terms satisfactory to the company. The company decided to amend the exchange offer in order to enhance the likelihood of its completing a refinancing of its senior, secured debt on satisfactory terms.

All other previously announced terms of the offer which have not been specifically amended remain in effect.

The company said it has discussed the amendment to the exchange offer with representatives of the four largest holders of the 12¾% notes, who have indicated their intention to continue to participate in the exchange offer, as amended.

Holders who had already tendered their 12¾% notes and who wish to participate in the amended exchange offer do not need to take any further action. Holders who have not tendered their 12¾% notes but who wish to participate in the amended exchange offer should follow the directions for tendering notes set forth in the amended offering circular. Holders who have already tendered their 12¾% notes but who do not wish to participate in the amended exchange offer should follow the directions for withdrawing tendered notes set forth in the offering circular.

AS PREVIOUSLY ANNOUNCED Lexington Precision, a New York-based manufacturer of rubber and metal components for the automobile and medical devices industries, said on July 10 that it had begun an exchange offer for its $27.412 million of outstanding 12¾% notes. Under the terms of the exchange as originally announced - a number of the terms would be subsequently amended, as indicated - the offer is open only to holders of record (as of July 1) of the existing notes. The company would give them a principal amount of new 11½% senior subordinated notes due 2007 equal to the sum of the principal amount of the outstanding 12¾% notes, plus the accrued interest on those notes from Aug. 1 1999, through April 30, 2002. The company said that accrued interest would total $350.625 per $1,000 principal amount of the existing notes. It said that if all of the outstanding existing notes were to be tendered and the exchange offer completed, Lexington Precision would issue new 11½% notes to cover a total of $9.611 million of accrued interest from the existing notes.

Lexington Precision initially said that the exchange offer would expire at midnight ET on Aug. 7, although this deadline was subsequently extended multiple times. It said that interest on the new 11½% notes would accrue from May 1, 2002; interest for the three-month period ended July 31 would be paid on the issue date of the 11½% notes, and after that, would be payable quarterly on each November 1, February 1, May 1, and August 1. The company said that holders of the new 11½% notes would also receive a participation fee equal to $22.20 per $1,000 principal amount of 11½% notes issued, payable in three equal installments on Sept. 30, 2002, Dec. 31, 2002 and March 31, 2003. Lexington further said it would also issue to the holders of the new notes warrants to purchase 10 shares of common stock per $1,000 principal amount of notes; the warrants would allow their holders to buy the stock at a price of $3.50 per share at any time during the period from Jan. 1, 2004 through Aug. 1, 2007. Prior to Jan. 1, 2004, the warrants will not be detachable from the 11½% notes and will be transferable only as part of a unit with the notes.

The company said that it was undertaking the exchange offer as part of a larger comprehensive financial restructuring plan that would also involve an extension of the company's 10½% senior notes and 14% junior subordinated notes, and a refinancing of the company's senior, secured credit facilities. It said that completion of the exchange offer would be subject to a number of conditions, including the refinancing of Lexington's other debt on satisfactory terms. Completion of the exchange offer would also be subject to the condition that at least 99% of the outstanding 12¾% notes be tendered for exchange and not withdrawn. The company warned that if the exchange offer were to be completed, it would not pay principal or accrued interest on any untendered 12¾% notes. It further said that the exchange offer reflects an agreement in principle that it reached with the four largest holders of its 12¾% notes, who among them control a total of $20.49 million of the 12¾% notes, or 74.7% of the $27.412 million outstanding.

On Aug. 7, the company extended the expiration of the exchange offer to 12 midnight ET on Aug. 30, and on Aug. 30, it said that it had again extended the offer to midnight ET on Sept. 30 and said that it had received tenders of $27,131,875 of the notes, or 98.98% of the outstanding amount, just shy of the 99% minimum tender condition. On Sept. 30, Lexington announced the further extension of the offer to 12 midnight ET on Oct. 18, and said that it had received tenders of $27,208,875 of the notes, or slightly more than 99% of the outstanding amount, satisfying the minimum tender condition to the consummation of the exchange offer. On Oct. 18, the company announced the further extension of the offer to 12 midnight on Oct. 31, subject to possible further extension, and said that as of Oct. 18, some $27,209,125 of the notes, or slightly more than 99% of the outstanding amount, had been tendered.

A series of similar announcements further extending the offer were subsequently made, most recently on Feb. 28, with the same level of noteholder participation as previously announced.

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