THL offer for Michael Foods' 11¾% notes expires with nearly total acceptance

New York, Nov. 20 - THL Food Products Co. said that its previously announced tender offer for Michael Foods Inc.'s (B3/B-) 11¾% senior subordinated notes due 2011, along with the related solicitation to amend the notes' indenture, expired as scheduled at 9 a.m. ET on Nov. 20, without further extension.

As of that deadline, $199.95 million of the notes, or 99.98% of the outstanding amount, had been tendered by their holders, leaving $50,000 of the notes outstanding.

The notes were tendered for in connection with the previously announced acquisition of Michael Foods by THL Food Products and senior management of Michael Foods.

As previously announced, THL Food Products Co. (along with THL Food Products Holding Co., an affiliate of Thomas H. Lee Partners LP), said on Oct. 20 that it had begun a cash tender offer and consent solicitation for Michael Foods, Inc.'s $200 million of 11¾% notes, in connection with the acquisition of Michael Foods.

It initially said the tender would expire at 11:59 p.m. ET on Nov. 17 (this deadline was subsequently extended). Tendered notes could not be withdrawn and consents could not be revoked after the consent date, except in limited circumstances.

It said that the purchase price to be paid for each $1,000 principal amount of notes validly tendered would be based on a fixed spread of 75 basis points over the yield on the pricing date (Nov. 3) of the 6 7/8% U.S. Treasury Note due May 15, 2006, less the consent payment. THL will also pay accrued interest up to but not including the date of payment. THL said that should the tender offer be extended by the purchasers by 10 or more business days, the new pricing date would be the ninth business day prior to the expiration date.

THL also said that it was soliciting consents to amendments to eliminate substantially all of the restrictive covenants in the indenture governing the notes, and said the consent payment of $30 per $1,000 principal amount of notes would be paid to holders validly tendering notes and delivering the related consents by 5 p.m. ET on Oct. 31, subject to possible extension.

It said that holders could not tender their notes without delivering consents and could not deliver consents without tendering their notes.

THL said the offer would be subject to certain conditions including completion of the acquisition and the now-fulfilled condition of receipt of consents from holders representing a majority in principal amount of the outstanding notes.

On Nov. 3, THL said that it had received the requisite amount of consents from the holders of the 11¾% notes to amend the notes' indenture, having received consents from holders representing 99.95% of the outstanding notes as of the expiration of the previously announced consent deadline (at 5 p.m. ET on Oct. 31). It said that the overall tender offer for the notes would continue as scheduled.

THL subsequently announced that on October 31, 2003, Michael Foods and BNY Midwest Trust Company entered into a Fourth Supplemental Indenture for the notes, which, among other things, deleted certain covenants in the notes' indenture and modified certain events of default.

THL also said that it had set the consideration it will offer to tendering noteholders, based on a formula calculated using a previously announced reference security.

The total consideration per $1,000 principal amount for holders who tendered on by the now-expired consent deadline will be $1,254.16, of which $30 is a consent payment and $1,224.16 is the tender offer purchase price. Holders tendering after the consent deadline will receive the tender offer purchase price, but not the consent payment. In addition, all tendering noteholders will receive accrued interest up to but not including the settlement date.

The dealer manager and solicitation agent was Banc of America Securities LLC (contact High Yield Special Products at 888 292-0070 or collect at 704 388-4813). The information agent was Georgeson Shareholder Communications, Inc. (call 888 549-6613 or collect at 212 440-9800).

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