USI gets enough tenders for floaters, 9¾% notes to amend indentures

By Toni Weeks

San Diego, Dec. 27 - USI Holdings Corp. announced the early results for its cash tender offer for its $225 million of senior floating-rate notes due 2014 and $175 million of senior subordinated notes due 2015.

According to a press release, the company received tenders for about $192.6 million, or 86%, of its $225 million of floating-rate notes and roughly $115.7 million, or 66%, of its $175 million of senior subordinated notes by 5 p.m. ET on Dec. 14, the consent payment deadline.

The purchase price per $1,000 principal amount of notes is $1,000.47 for the floating-rate notes and $1,025.19 for the 9¾% notes, which includes a $50 consent payment for notes tendered by the consent payment deadline. The company will also pay accrued interest up to but not including the payment date.

Holders who tender after the consent payment deadline but prior to the expiration date will receive per $1,000 principal amount of notes $950.47 or $975.19, respectively, plus accrued interest.

In connection with the offer, the company solicited consents from noteholders to amend the indentures for both note series to eliminate substantially all of the affirmative and restrictive covenants; restrictions on the ability of USI to merge, consolidate or sell substantially all of its properties or assets; and some events of default and other related provisions. The amendments were conditional on receiving consents from at least a majority in principal amount of each series of notes, which has been satisfied. The company reported it has executed supplemental indentures for both series of notes.

The company said in a previous press release that the adoption of the proposed amendments could have "adverse consequences" on non-tendering holders of the notes, because notes that remain outstanding after completion of the tender offer would not be entitled to the affirmative and restrictive covenants of event of default and related provisions that the company wants to eliminate.

As previously reported, the offer is also conditional on the closing of the acquisition of USI from GS Capital Partners VI Fund, LP by Onex Corp. and sufficient financing proceeds to fund the acquisition and tender offer. USI priced a $630 million issue of eight-year senior notes at par to yield 7¾% on Dec. 14, as reported by Prospect News.

Notes and consents may no longer be withdrawn.

The offer will expire at 11:59 p.m. ET on Dec. 31, with final settlement to occur promptly after.

USI also said it issued a notice of redemption on Nov. 30 to redeem any and all outstanding notes on Dec. 31. The redemption price will be par for the floaters and 102.438 for the 9¾% notes, plus accrued interest. Bank of New York Mellon is the trustee and paying agent.

Morgan Stanley & Co. LLC (800 624-1808 or collect 212 761-1057) is the dealer manager for the tender offer and consent solicitation. D.F. King & Co., Inc. (800 290-6426) is the tender agent and information agent.

Briarcliff Manor, N.Y.-based USI is an insurance broker.

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