Krystal tenders for 10¼% notes

New York, May 11 - The Krystal Co. said it has begun a cash tender offer for any and all $60.98 million principal amount of its outstanding 10¼% senior notes due 2007 and has also begun soliciting noteholder consents to proposed indenture changes.

The company set a consent deadline of 5 p.m. ET on May 24 and said the tender offer would expire at midnight ET on June 7, with both deadlines subject to possible extension.

Krystal, a Chattanooga, Tenn.-based restaurant chain operator, said that it will pay total consideration to holders tendering their notes at or before the consent deadline of $1,017.08 per $1,000 principal amount of notes tendered and accepted for purchase by the company, which will include a consent payment of $17.08. Holders tendering their notes after the consent deadline but before the offer expires will receive the purchase price of $1,000 per $1,000 principal amount of notes but will not receive the consent payment. All tendering noteholders will additionally receive accrued and unpaid interest up to, but not including, the date of payment for the notes.

Krystal said that holders tendering their notes will be required to consent to the proposed amendments, which would eliminate substantially all of the restrictive covenants contained in the indenture. Holders may not tender their notes without also delivering consents or deliver consents without also tendering their notes.

Adoption of the amendments requires the consent of holders of at least a majority of the outstanding principal amount of the notes.

The offer is conditioned upon the company's receipt of tenders from holders of notes representing a majority of the outstanding principal amount of the notes, consummation of the anticipated financing, and other customary conditions.

Banc of America Securities LLC will act as dealer manager and solicitation agent in connection with the offer (contact the High Yield Special Products department collect at 704 388-9217 or at 888 292-0070). Global Bondholder Services is the information agent and depositary for the offer (call collect at 212 430-3774 or at 866 470-3700).

The company also said that it has called for redemption $10 million principal amount of the outstanding notes; the redemption - which will be used to take out any notes not tendered under the tender offer, will take place on June 14, subject to possible extension, at a price of 101.708%.

Information regarding the call has been posted with the Depositary Trust Co.

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