Nebraska Book says 86% of 8¾% notes, 86% of 10¾% notes tendered

New York, March 5 - Nebraska Book Co. Inc. and NBC Acquisition Corp. said they completed their tender offers and related refinancing.

By the expiration date of midnight ET on March 3, holders had tendered 86% of Nebraska Book's $110 million outstanding principal amount of 8¾% senior subordinated notes due 2008 and 86% of NBC's $76 million outstanding principal amount of 10¾% senior discount debentures due 2009.

Consents were also received to amend the indentures, and those amendments have now come into effect.

Nebraska Book and NBC also said they will call for redemption any notes not tendered, $15.4 million principal amount for Nebraska Book's 8¾% notes and $10.5 million principal amount for NBC's 10¾% debentures.

Nebraska Book will redeem its notes on April 3 at 103.917% of par plus accrued interest to the date of redemption. NBC will also redeem its notes on April 3, and the price will be 103.583% of par plus accrued interest to the date of redemption.

Along with completion of the tender, Nebraska Book completed the sale of $175 million of 8 5/8% senior subordinated notes due 2012 and NBC completed the sale of $77 million principal amount at maturity of 11% senior discount notes due 2013.

Nebraska Book completed the refinancing of its existing senior credit facility with a new $230 million facility, increasing the term loan to $180 million. The revolver is $50 million, which was not drawn as of March 4.

In addition, NBC received an indirect equity contribution of $28.1 million from funds affiliated with Weston Presidio and NBC completed a merger with a wholly owned subsidiary of NBC Holdings Inc. in a transaction in which all the outstanding common stock of NBC held by Haas Wheat Capital Partners and affiliated entities and certain shares held by company management were converted into the right to receive cash. On completion, funds affiliated with Weston Presidio held 84.4% of the common stock on a fully diluted basis, with the remaining 15.6% held by management.

On Feb. 19, Nebraska Book and its corporate parent NBC Acquisition said they received the necessary consents to proposed indenture changes from the holders of Nebraska Book's 8¾% notes and NBC's 10¾% debentures.

The consent solicitation expired as scheduled at 5 p.m. ET on Feb. 18. As of that time, holders of 85.764% of the 8¾% notes had tendered their notes and delivered consents as had the holders of 86.178% of the 10¾% debentures.

The tender offers continued and were scheduled to expire at midnight ET on March 3, subject to possible extension.

As previously announced, Nebraska Book, a Lincoln, Neb.-based textbook distributor, and NBC said they had begun separate but concurrent tender offers for all $110 million of Nebraska Book Co.'s outstanding 8¾% notes and all $76 million outstanding principal amount of NBC Acquisitions' 10¾% debentures. The two companies said they were also soliciting consent of the respective noteholders to proposed changes in the indentures governing the two series of securities - something which they unsuccessfully tried to do last fall.

Nebraska Book said it would offer all tendering holders of its 8¾% notes a purchase price of $1,027.92 per $1,000 principal amount of notes tendered and accepted for purchase, as well as accrued and unpaid interest up to, but not including, the payment date. Noteholders tendering their notes by the consent deadline would receive an additional $1.25 per $1,000 principal amount consent payment, for total consideration of $1,029.17 per $1,000 principal amount, plus interest.

NBC Acquisition said it was offering all tendering holders of its 10¾% debentures a purchase price of $1,034.58 per $1,000 principal amount of notes tendered and accepted for purchase, as well as accrued and unpaid interest up to, but not including, the payment date. Debenture holders tendering their notes by the consent deadline would receive an additional $1.25 per $1,000 principal amount consent payment, for total consideration of $1,035.83 per $1,000 principal amount, plus interest.

In connection with the tender offers, Nebraska Book and NBC Acquisition said they were soliciting consents from holders of the notes and the debentures to amend indenture provisions, the second attempt by the two companies to do this within the past four months; on Oct. 23, the two companies announced that their solicitation of holder consents to changes in the indentures of the notes and the debentures, which had begun on Oct. 7, expired as scheduled on Oct. 22 without the companies having received the necessary consents from their holders.

In the current consent solicitations, Nebraska Book said it wanted the holders of its 8¾% notes to approve indenture amendments that would eliminate several indenture provisions, while NBC Acquisition was asking its 10¾% debenture holders to also approve similar amendments that would eliminate similar provisions:

Affected were:

-Article III - Covenants (Sections 3.2 through 3.14 and 3.17 only);

- Article IV - Successor Company (Subsection 4.1(iii) only); and

- Article VI - Defaults and Remedies (Subsections 6.1(6), 6.1(9), and 6.1(10)).

The companies set the condition that adoption of the proposed amendments requires the consent of the holders of at least a majority in principal amount of the notes or the debentures, respectively. If these proposed amendments become operative, they will also delete any corresponding provisions in the notes or in the debentures themselves.

Nebraska Book and NBC Acquisition said they were undertaking the tender offers and consent solicitations in connection with a proposed recapitalization transaction, which involves funds affiliated with Weston Presidio Capital (which holds some 32.1% of the outstanding capital stock of NBC Acquisition) will acquire control over substantially all of the rest of the outstanding capital stock of the company.

JPMorgan (call 212 270-9153) and Citigroup (call 800 558-3745 or 212 723-6106) will be the dealer-managers and solicitation agents for the tender offers and consent solicitations. Global Bondholder Services Corp. is the information agent (212 430-3774 or 866 857-2200).

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