Hanover Compressor mounts exchange offers for notes

Hanover Compressor Co. said Wednesday (Feb. 12) that it has begun exchange offers for its $300 million of outstanding 8½% senior secured notes due 2008 issued by Hanover Equipment Trust 2001A and its $250 million of outstanding 8¾% senior secured notes due 2011 issued by Hanover Equipment Trust 2001B, neither of which has been registered for unrestricted public trading.

Hanover, a Houston-based provider of natural gas compression services, is offering to exchange new 8½% notes and 8¾% for the outstanding notes on a 1-for-1 basis. The terms of the new notes are identical to the terms of the applicable old notes except that the new notes are freely transferable under the Securities Act and do not have any exchange or registration rights.

The offer will expire at 5 p.m. ET on March 13, subject to possible extension.

Hanover said that due to delays in effecting the exchange offers the two Hanover trusts began to accrue additional interest of approximately $15,000 per day on Jan. 28, which resulted in corresponding increases in the company's rent payments to the trusts. Hanover's rent payments to the trusts have been included in its financial statements under leasing expense. Upon completion of the exchange offers, the trusts will no longer incur such additional interest and, Hanover will reduce its leasing expense by approximately $15,000 per day.

Lexington Precision extends exchange offer for 12¾% notes

Lexington Precision Corp. said on Wednesday (Feb. 12) that it had again extended 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. The offer was extended to midnight ET on Feb. 18, subject to possible further extension, from the previous Feb. 12 deadline.

Lexington said that as of Feb. 12, holders had tendered $27,209,125 of the notes, or 99.3% of the outstanding amount, unchanged from the amount announced on Oct. 31 and in a number of subsequent expiration deadline extension announcements. While that has satisfied the 99% minimum tender condition to the exchange offer, the company said that a number of other conditions have not yet been satisfied, including the completion of a new senior secured credit facility on terms satisfactory to the company.

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, which 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 of this year. The company said that accrued interest would total $350.625 per $1,000 principal amount of the existing notes. 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. It said that interest on the new 11½% notes would accrue from May 1 of this year; 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 and March 31, 2003. Lexington will 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 the exchange offer is being undertaken as part of a larger comprehensive financial restructuring plan that would also involve an extension of the company's 10 ½% 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 is completed, it does not presently intend to 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.

On Nov. 1, the company announced the further extension of the offer to midnight ET on Nov. 15, subject to possible further extension, from the previous Oct. 31 deadline. It reported the same level of noteholder participation in the offer as previously. The company further announced on Nov. 14 that it was extending the offer to midnight ET on Dec. 4, with the same level of noteholder participation as previously announced. Similar announcements were made on Dec. 4, Dec. 20, Jan. 10 , Jan. 31 and Feb. 7, extending the offer to-respectively-Dec. 20, Jan. 10, Jan. 31, Feb. 7 and Feb. 12, with the same level of noteholder participation as previously announced.

Advance Auto Parts bought back 10¼% notes and 12 7/8% debentures in fourth quarter

Advance Auto Parts Inc. (Caa1) said on Wednesday (Feb. 12) that it had repurchased $24 million in face value of its 10¼% senior subordinated notes due 2008 and 12 7/8% senior discount debentures due 2009 during the fourth quarter. The repurchases resulted in an after-tax extraordinary loss of $1.7 million, which includes unamortized discounts, deferred loan fees and premiums paid.

Advance did not give a breakdown as to what amount of each series of bonds had been repurchased during the quarter. According to a previous filing with the Securities and Exchange Commission, it had approximately $333.8 million of the 10¼% notes and approximately $89.5 million of the 12 7/8% debentures outstanding as of Oct. 5, 2002, not including the transactions announced Wednesday.

Advance, a Roanoke, Va.-based auto parts store chain operator, said in its fourth-quarter earnings release that during the fiscal year, it repurchased $64.6 million in face value of bonds and pre-paid approximately $162 million in bank debt, incurring an after-tax extraordinary loss of $10.4 million relating to premiums paid to repurchase bonds, un-amortized discounts and write-off of deferred loan fees.

Moog Inc. hopes for early redemption of 10% '06 notes

Moog Inc. (Ba3) said on Wednesday (Feb. 12) that it is currently in negotiations with its lenders to expand its bank credit facility, which would enable the company to fund an early redemption of its $120 million of outstanding 10% senior subordinated notes due 2006.

Moog, an East Aurora, N.Y.-based manufacturer of precision control components and systems, said the notes will become callable at par on May 1.

The company said it does not expect the early redemption of the senior subordinated notes - if it occurs - to result in a significant change to its 2003 earnings outlook, as any interest expense savings for the remainder of 2003 related to an early redemption would be substantially offset by expenses to be recognized related to the transaction.

Gala Group tenders for 12% '10 notes

Gala Group Ltd. (B2) said on Tuesday (Feb. 11) that it was offering to purchase all of the £155 million of outstanding 12% senior notes due 2010 issued by its Gala Group Holdings Ltd. subsidiary. It is concurrently seeking noteholder consents to changes in the notes' indenture that would substantially eliminate all of the restrictive covenants, certain events-of-default, and certain additional covenants and rights contained in the indenture.

Gala Group - which operates bingo clubs throughout the U.K. - said the tender offer was being mounted in conjunction with its planned acquisition by Candover Investments plc and Cinven Ltd. through their Storerepair Ltd. unit for approximately £1.24 billion.

The tender offer is scheduled to expire at 10 a.m. London time on March 14, subject to possible extension. It set the consent date for the offer as either Feb. 25, subject to possible extension, or, if the requisite amount of consents (representing at least a majority of the outstanding notes) has not been achieved by then, the date on which that requisite amount is achieved. Tendered notes may be withdrawn and consents revoked at any time prior to 4 p.m. London time on the consent date, while notes tendered after the consent date may not be withdrawn.

Gala Holdings will set the consideration it will pay for the notes on the second business day preceding the offer's expiration (tentatively, March 12, subject to possible extension). Total consideration will be determined by a formula based on a 50-basis point fixed spread over the yield to maturity at 2 p.m. London time on that day of the reference security, the 9.50% U.K. Treasury note due April 18, 2005. The company will pay accrued and unpaid interest on the notes up to, but not including, the payment date. The total consideration will include, where applicable, a consent payment of £30 per £1,000 principal amount of notes tendered. The consent payment will be paid only to those holders who tendered their notes (thus consenting to the proposed indenture changes) by the consent date; holders tendering their notes after the consent date will not be entitled to the consent payment as part of their consideration.

Gala Holdings plans to execute, along with the notes' trustee, a supplemental indenture incorporating the proposed indenture changes, on the consent date, and those changes will take effect at that time. Any notes remaining outstanding and unpurchased after the conclusion of the tender offer will still be subject to the amended indenture terms. Holders of such notes will no longer be entitled to the benefits of certain covenants applicable to the company and its subsidiaries and certain events-of- default provisions contained in the current indenture.

Completion of the offer is subject to fulfillment of several conditions, including the valid tender of at least a majority of the outstanding notes by the offer's expiration deadline; the execution of a supplemental indenture incorporating the proposed indenture changes; completion of the planned acquisition of Gala Group; and the company's having received, on satisfactory terms, sufficient funding to complete the purchase of the notes on the payment date.

Credit Suisse First Boston (call +44-0-207-883-5423) is the dealer-manager for the offer. The tender agents are Deutsche Bank AG London (call +44-0-207-547-1082) and Deutsche Bank Luxembourg SA (call +44-0-207-547-1082).

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.