Atrium Cos. raises consent fee in solicitation among 10½% noteholders

New York, Nov. 14 - Atrium Cos., Inc. (B3) said that it had raised the consent fee it is offering to holders of its 10½% senior subordinated notes due 2009 under its previously announced solicitation of consents to proposed indenture changes and waivers of indenture provisions in connection with the proposed acquisition of the company. The cash consent fee was increased to $3.75 per $1,000 principal amount of notes for which consents and waivers are delivered, up from the originally announced $2.50 per $1,000.

Holders who have previously submitted their consents are not required to revoke or resubmit their consents in order to receive the full amount of the increased consent fee.

Consents may be revoked by holders at any time prior to receipt of the consents of holders of a majority in principal amount of the notes and the execution of a supplemental indenture containing the previously outlined amendments to the indenture.

As previously announced, Atrium, a Dallas-based window manufacturer, said on Oct. 28 that it had agreed to be acquired by an investor group led by an affiliate of Kenner & Co., Inc. and certain members of Atrium's management in a $610 million transaction which it said would be in compliance with the indenture governing Atrium's 10½% notes.

Atrium said that under the 10½% notes' indenture, it is required to make an offer to purchase the notes and will either begin the offer within 30 days after the closing of the acquisition transaction, or, alternatively, will solicit consents to leave the 10½% notes outstanding. Atrium issued $175 million of the notes in May 1999.

Atrium said that all of its other outstanding indebtedness, including accrued interest, will continue to be outstanding or be refinanced.

On Nov. 6, Atrium began soliciting waivers and consents from the holders of record (as of Nov. 5) of its 10½% notes.

Atrium said that the consent solicitation would expire at 5 p.m. ET on Nov. 18, subject to possible extension.

Atrium said it was soliciting the consents of the 10½% noteholders to certain proposed waivers of and amendments to certain provisions of the notes' indenture. It said the purpose of the proposed waivers and amendments is, first, to waive the Atrium's obligations under the change of control provision of the indenture to make a change of control offer to purchase the notes at 101% of their aggregate principal amount plus accrued and unpaid interest up to the date of purchase in connection with its previously announced acquisition transaction, and second, to amend the indenture in certain respects.

Under the proposed indenture changes, the indenture would be amended to provide that (a) certain direct and indirect equity holders of KAT Parent (the company to be formed in the merger between Atrium Cos.' corporate parent, Atrium Corp. and an affiliate of Kenner & Co.) and their respective affiliates, as defined in the indenture, will be considered "permitted holders" under the indenture; (b) certain restrictions on affiliate transactions, as defined in the indenture, will not apply to either the payment of transaction costs, fees, expenses and other amounts in connection with the merger and the related financing transactions, or to the future payments of fees to Atrium's new equity sponsors; and (c) Atrium can issue additional notes under the indenture having identical terms as the outstanding notes subject to compliance with the limitation on indebtedness covenant contained in the indenture.

The consent solicitation is conditioned upon holders delivering the requisite amount of validly tendered (and not subsequently revoked) consents and waivers, representing at least a majority of the outstanding principal amount of the notes, by the expiration deadline, and upon completion of the Atrium/Kenner merger by Dec. 31. The company said it would offer a consent fee of $2.50 per $1,000 principal amount (this was subsequently raised) upon satisfaction of the various conditions to the solicitation, promptly after the consummation of the merger between Atrium and Kenner. No accrued interest will be paid on the consent fee.

If the requisite consents are obtained (and not revoked) and the proposed waivers and amendments are adopted and become effective, they will be binding on all holders of the notes, whether or not they have delivered a consent.

The joint solicitation agents for the consent solicitation are UBS Investment Bank and CIBC World Markets.

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