CSK Auto gets 94% of 12% notes in tender offer

New York, Jan. 20 - CSK Auto Corp. (B2/B) announced the completion of its previously announced refinancing transactions, including its tender offer for all of its outstanding of 12% senior notes due 2006, and the related consent solicitation.

CSK said that the tender offer expired at midnight ET on Jan. 15, with no extension. As of that deadline, $265 million of the notes, or about 94% of the $280 million outstanding, had been tendered. That was the same amount as had been tendered by the Dec. 31 consent deadline.

CSK Auto noted that it had already received the consents to amend the indenture that will govern the roughly $15 million of remaining outstanding notes and said that it expects to redeem them in December when they become callable.

The company also announced the completion of two other transactions as part of its refinancing - the official closing of its recent issue of new 7% senior subordinated notes and changes in its credit facility. Both were conditions to the successful completion of the tender offer.

CSK Auto said that it amended and restated its senior credit facility, increasing the size of the facility to $400 million from $325 million and lowering the interest rate margin on the term loan portion of the facility by 50 basis points.

As previously announced, CSK Auto Corp., a Phoenix-based specialty retailer in the automotive aftermarket, said on Dec. 16 that it was beginning a cash tender offer for all $280 million of the outstanding 12% notes issued by its CSK Auto Inc. subsidiary. It also said it was seeking noteholder consent to proposed indenture changes that would eliminate substantially all of the restrictive covenants and certain default provisions.

It set a consent deadline of 5 p.m. ET on Dec. 31, and an offer expiration deadline of midnight ET on Jan. 15, and a tentative settlement date of Jan. 16. It also said that it would set the tender offer consideration it would offer for the notes at 10 a.m. ET Jan. 2, using a formula based upon a 100-basis point fixed spread over the yield at that time of the reference security, the 2% U.S. Treasury note due Nov. 30, 2004. The company said that the formula assumed that the notes would otherwise be redeemed in full at $1,060 per $1,000 principal amount on their first call date of Dec. 15, 2004.

It said total consideration to be paid to those noteholders who tendered their notes by the consent deadline (thus consenting to the proposed indenture changes) would include a $20 per $1,000 principal amount of notes tendered under the offer and accepted for payment. Noteholders tendering after the consent deadline would not receive the consent payment but only the tender offer consideration. All tendering noteholders would also receive the accrued and unpaid interest up to, but not including, the payment date.

On Jan. 2, CSK Auto said that it would pay $1,126.465 plus accrued and unpaid interest, per $1,000 principal amount of 12% notes tendered, with holders who tendered with consents by the consent deadline slated to receive the additional $20 per $1,000 principal amount consent payment.

In announcing the rules for the tender offer, CSK said noteholders wishing to tender their notes would also have to consent to the indenture changes and could not deliver consents without also tendering the related notes. It said holders could not revoke consents without also withdrawing the notes tendered under the terms of the tender offer, and said that only those holders who had tendered their notes and delivered their consents by the consent deadline could withdraw their tenders and revoke their consents at any time up to that deadline but could not do so afterwards, except if required by law.

CSK said that the tender offer and consent solicitation was part of its plan to refinance its existing debt to reduce its annual interest expense. It said that the tender offer and consent solicitation would be funded by a previously announced $100 million increase in the company's existing senior credit facility to $425 million, by the issuance of $200 million of new notes and with cash on hand. It said that completion of the tender offer would be subject to completion of the note offering and the amendment of CSK Auto Inc.'s senior credit facility, among other conditions. On Jan. 9 high yield syndicate sources said that CSK had sold an upsized issue of $225 million new 7% senior subordinated notes due 2014, thus fulfilling one condition of the tender offer.

Credit Suisse First Boston LLC was the dealer-manager and solicitation agent for the tender offer and consent solicitation (call Liability Management Group at 800 820-1653). MacKenzie Partners Inc. was the information agent (212 929-5500).

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