Pac-West says tender for 13½% notes oversubscribed

New York, Dec. 18 - Pac-West Telecomm, Inc. said its cash tender offer to buy up to $59.0 million of its $95.1 million outstanding principal amount of series B 13½% senior notes due 2009 is oversubscribed.

By the expiration of the tender at 5.00 p.m. Thursday, holders had tendered $79.3 million principal amount of the notes or 83.4% of the amount outstanding.

As a result, Pac-West said it will accept offers on a pro rate basis.

Following completion of the tender offer and consent solicitation, Pac-West will have $36.1 million principal amount of the notes outstanding.

The Stockton, Calif. communications company also said that shareholders approved two proposals related to its previously announced financing transaction with Deutsche Bank AG - New York.Shareholder approved issuance to Deutsche of warrants to buy 26.667 million shares of Pac-West's common stock at an exercise price of $1.50 per share and a resolution ratifying all other matters related to the issuance of the warrants and the common stock issuable upon exercise of the warrants, including the financing transactions with Deutsche Bank under which the warrants will be issued. As previously announced, as part of the financing transaction, Pac-West agreed to sell to Deutsche Bank a $40 million principal amount senior secured note.

"We are very pleased that our bondholders and shareholders support this financing. Through this transaction, we continue to fulfill our obligations to our bondholders while improving financial performance and growth prospects for our shareholders by reducing interest payments and restrictive covenants," said Ravi Brar, Pac-West's chief financial officer, in a news release.

Pac-West said it expects the tender offer and consent solicitation will settle and the transactions with Deutsche Bank close on Friday.

On Nov. 26 Pac-West said that the early tender deadline on its previously announced tender offer and consent solicitation for the major portion of its outstanding series B 13½% senior notes due 2009 expired as scheduled at 5 p.m. ET on Nov. 25, without further extension.

The company said that as of that deadline, $76.8 million principal amount of the notes, or about 80.7% of the outstanding amount had been validly tendered and not withdrawn, well up from the $15.7 million which had been tendered as of 5 p.m. ET on Nov. 17 when Pac-West announced amended terms for the tender offer and extended its deadlines.

Pac-West Telecomm announced on Oct. 30 that it had begun a cash tender offer to buy up to $74 million of the $95.1 million principal amount of its 13½ % notes or 77.8% of the amount currently outstanding (out of the $150 million which the company originally issued in January 1999).

On Nov. 18, the company said that it had reduced the amount of notes it was offering to buy to $59 million, or about 62% of the outstanding amount, a decrease of $15 million, or 15.8%, and said that if holders of a greater principal amount of notes accept the offer it would accept notes for purchase on a pro rata basis based upon the relative principal amount of notes tendered by holders.

The company said it was also soliciting consents to amend the indenture governing the notes in order to eliminate most of the principal restrictive covenants, among other things.

Pac-West initially set an early tender deadline of 5 p.m. ET on Nov. 13, and said the tender offer and consent solicitation would expire at 5 p.m. ET on Dec. 4 (both deadlines were subsequently extended).

Pac-West initially offered $900 per $1,000 principal amount of senior notes plus accrued interest up to but not including the settlement date, and said that holders tendering by the early deadline would receive an additional $20 premium, for a total of $920 per $1,000 principal amount. On Nov. 18, it announced that the tender offer consideration had been raised to $980 per $1,000 principal amount, which also raised the total consideration figure to $1,000 per $1,000 principal amount. All tendering holders will also receive accrued and unpaid interest up to, but not including, the settlement date.

The company said that of the total consideration, 25 cents per $1,000 principal amount would be the consent payment, payable to holders tendering their senior notes and validly delivering their consents prior to the expiration of the consent solicitation, whether or not such consents are accepted by Pac-West.

The company said the early tender premium and consent payment would only be paid if the tender offer were completed.

It said the amendment to the indenture would require the consent of holders of at least a majority of the principal amount of the notes outstanding.

It said that holders tendering their notes would be required to consent to the proposed amendments and holders could not deliver consents without also tendering their notes.

Tendered notes could be withdrawn and consents revoked at any time prior to the execution of the supplemental indenture, which that company said was expected to occur promptly following the expiration of the early tender period.

Pac-West said the tender offer would be conditioned upon, among other things, receipt of the necessary consents for the proposed amendments, the execution of the supplemental indenture, the completion of a previously announced financing transaction with Deutsche Bank, and customary conditions.

UBS Securities LLC is dealer manager and solicitation agent for the tender offer and the consent solicitation (contact Brian Taylor at 415 352-6085). The depositary is Wells Fargo Bank Minnesota, NA. The information agent is Georgeson Shareholder (800 843-0079).

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