Wickes asks noteholders to act promptly in exchange, examines other options

New York, Jan. 1 - Wickes Inc. called on holders of its 11 5/8% senior subordinated notes that matured on Dec. 15 to respond quickly to its exchange offer.

But the Vernon Hills, Ill., distributor of building materials said it is also looking at other options if an insufficient number of noteholders respond.

"It is imperative for holders of our senior subordinated notes to act promptly on our exchange offer," said Wickes chief financial officer James A. Hopwood in a news release.

He encouraged holders to contact him directly at 800 360-9457 or 847 367-3552.

Although the company is working on arrangements to complete the exchange, if less than the required minimum tender, he said the lenders "have not indicated that they expect to make additional funds available to enable us to pay principal and interest owed to non-tendering note holders."

Wickes intends to make the cash payments to tendering holders in the exchange with funds borrowed from its lenders on a senior secured basis. As a result, if the company is subsequently liquidated in a bankruptcy proceeding, asset values remaining for non-tendering holders of the notes would likely be less than the liquidation values described in the Nov. 4 offering memorandum for the exchange.

Hopwood also said that Wickes "is exploring all available options" should it be unable to close the exchange.

Wickes said it has extended the expiration date of the exchange to 5 p.m. ET Jan. 9 from 5 p.m. ET Dec. 30.

The company also said it is in discussions with Imagine Investments and its lending syndicate led by Merrill Lynch Capital about financing for the exchange if less than $20.067 million of senior subordinated notes are validly tendered and not withdrawn prior to the expiration date.

As of late on Dec. 29, $10.922 million or 51.7% of the outstanding principal amount of the notes had been tendered including $3.550 million tendered by the largest holder, Barry Segal of Bradco Supply.

Wickes previously extended the exchange on Dec. 16 from the previous deadline of Dec. 15 and amended the offer.

As of the old deadline, holders had tendered $9.539 million of their notes for exchange, or about 45.2% of the outstanding principal amount, unchanged from the amount which had been tendered by the previous Dec. 10 deadline.

Wickes amended the terms of the offer to allow tendering noteholders to elect to receive either $500 in cash and $250 principal amount of new 10% convertible notes due 2007; $1,250 principal amount of new convertible notes; or $650 in cash. The change gives noteholders an all-cash option not previously offered and raises the amount of new notes offered under the all-notes option. The notes-and-cash option remains unchanged.

Wickes also said that in any case, if the exchange offer is completed, tendering noteholders will also receive accrued and unpaid interest on the subordinated notes at the existing coupon rate from June 16, 2003 through the closing date of the exchange offer.

As previously announced, Wickes said on Nov. 4 that it was offering new convertible notes or a combination of cash and convertibles for its $21.123 million principal amount of 11 5/8% notes.

The exchange was originally supposed to run through 5 p.m. ET Dec. 3, although the deadline was subsequently extended.

The company said that for each $1,000 principal amount of the existing notes, it was offering either $500 in cash and $250 principal amount of new 10% convertible notes due June 15, 2007 or $1,000 principal amount of the new convertibles (the latter, all-notes, option was subsequently increased and an all-cash option added to the consideration choices). Holders would also receive accrued interest.

The convertibles have a conversion price of $1.00 per share.

Wickes said it was making the exchange offer because it did not expect to generate sufficient cash from operations to pay the subordinated notes on their scheduled Dec. 15 maturity date.

Unless all the subordinated notes were to be tendered in the exchange, Wickes said it expected to default on its payment obligation.

The company said the exchange would be subject to at least $20,066,850 principal amount of the notes being exchanged, or 95% of the outstanding amount.

Closing would also be subject to Wickes obtaining the consent of its senior lenders to the exchange and the funding of an additional term loan under the senior credit facility, or the company entering into other financing arrangements under which it will borrow funds to make the cash payment in the exchange.

The information agent is D. F. King & Co. Inc. (888 869-7406), and the exchange agent is HSBC Bank USA (718 488-4475 attention: Paulette Shaw).

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