Regal Entertainment tenders for 9 3/8% notes

New York, April 15 - Regal Entertainment Group (B3/BB-) said that it has begun a cash tender offer for all $350 million principal amount of 9 3/8% senior subordinated notes due 2012 issued by its wholly owned Regal Cinemas Corp. (B2/BB-) subsidiary and was also seeking noteholder consents to proposed indenture amendments that would eliminate substantially all of the restrictive covenants and certain default provisions.

Regal is conducting the tender offer and consent solicitation in conjunction with another wholly owned subsidiary, Regal Cinemas Bonds Corp.

Regal set a consent deadline of 5 p.m. ET on April 27. The price the company will pay for the notes will be set at 10 a.m. ET on April 28, while the tender offer will expire at midnight ET on May 12, with all deadlines subject to possible extension.

Regal, a Knoxville, Tenn.-based movie theater operator, plans to set the consideration that it will pay for the notes on April 28, using a formula based on a fixed 100-basis point spread over the yield to maturity of the reference security, the 2.25% U.S. Treasury note due Feb. 15, 2007. Total consideration will include a $20 per $1,000 principal amount consent payment for notes tendered at or before the consent deadline.

Holders tendering their notes after the consent deadline but before the offer expiration will receive the tender offer consideration but no consent payment. All holders who tender their notes and who do not subsequently withdraw them will also receive accrued and unpaid interest up to, but not including the applicable payment date.

Regal plans to finance the tender offer and consent solicitation with a portion of the proceeds from a refinancing of Regal Cinema's existing debt, which is expected to consist of the sale of $400 million principal amount of new subordinated notes by Regal Cinemas; Regal Cinemas entering into a $1.35 billion senior secured credit facility.

In addition, about $930 million of the anticipated proceeds from the refinancing transaction, together with a portion of Regal Cinemas' available cash, will be distributed by Regal Cinemas to Regal, which intends to use about $710 million of the proceeds to pay an extraordinary dividend of $5 per share to its holders of Class A and Class B common stock, subject to board approval, with the balance set aside for general corporate purposes, including potential acquisitions.

Regal said that its obligation to purchase tendered notes is conditional upon the receipt of valid tenders from holders of at least a majority of the outstanding principal amount of the notes and the completion of the refinancing transactions.

Regal has retained Credit Suisse First Boston to serve as the dealer manager and solicitation agent for the tender offer and consent solicitation (call 800 820-1653). MacKenzie Partners Inc. is the information agent (call 800 322-2885). The depositary for the tender offer is U.S. Bank NA.

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