LaBranche buys $93.1 million 9½% notes, $236.4 million 12% notes in tender

New York, May 18 - LaBranche & Co. Inc. said it completed its tender offer for two series of outstanding notes, buying $93.1 million or 93.1% of its 9½% senior notes due August 2004 and $236.4 million or 94.5% of its 12% senior subordinated notes due March 2007.

In total the company paid $386.9 million, funded from its offering of $200 million 9½% senior notes due 2009 and $260 million 11% senior notes due 2012.

LaBranche said on May 6 it had again extended its previously announced tender offer for its 9½% notes and its 12% notes and the related consent solicitation to midnight ET on May 17 from the previous deadline at midnight ET on May 10; the company said the offer was being extended again so the expiration would coincide with the closing of its recent sale of $460 million principal amount of new senior notes due 2009 and senior notes due 2012, which priced on May 4.

All other terms and conditions of the tender offer remain unchanged.

Besides funding the tender offer for the 9½% notes and the 12% notes, LaBranche plans to use a portion of the proceeds from the note sale to repurchase shares of its outstanding series B preferred stock, although the preferred stock is not by its terms callable and the company cannot be certain that it will make an offer or be able to repurchase the preferred stock on acceptable terms.

As previously announced, LaBranche & Co., a New York-based stock specialist firm, said on April 6 that it had begun a cash tender offer and consent solicitation for all of its outstanding 9½% and 12% notes, as part of a refinancing being carried out by the company to "take advantage of current market opportunities" in order to extend maturities and modify terms of its outstanding debt.

It set a now-expired consent solicitation deadline of 5 p.m. ET on April 19 and initially said the tender would expire at midnight ET on May 3.

It said the payment to be made for the 9½% notes would be fixed on the business day following the consent deadline (i.e. April 20), using a formula based on the yield to maturity on the reference security, the 2 1/8% U.S. Treasury note due Aug. 31, 2004 plus 50 basis points. The total calculated by this method includes a $20 per $1,000 principal amount consent payment that will only be paid to holders who tendered by the consent deadline (the price has now been set).

For the 12% notes, LaBranche will pay $1,200 per $1,000 principal amount, again including a $20 per $1,000 principal amount consent payment that will only be paid to holders tendering by the consent deadline.

In both cases, holders will also receive accrued interest up to but not including the payment date. The payment date for the notes will be promptly following the tender offer expiration date.

Under the consent solicitation, LaBranche is seeking to eliminate substantially all of the restrictive covenants and certain events of default in the note indentures. It said that holders could not tender without also delivering consents and could not deliver consents without also tendering.

On April 20, LaBranche said that it had received the necessary consents to the proposed indenture changes from the holders of both the 9½% and the 12% notes, with consents having been received from holders of more than 92% of its $100 million of outstanding 9½% notes and more than 94% of its $250 million of outstanding 12% notes - a sufficient amount to approve the proposed amendments - by the consent deadline, which expired as scheduled at 5 p.m. ET on April 19 without extension.

LaBranche said that it would proceed to execute a supplemental indenture incorporating the desired amendments, which will become operative only if the company accepts the notes of such series for payment under the terms of the tender offer.

On April 21, LaBranche said that said that it had set the consideration it will pay to the holders of its 9 ½% notes (the price for the 12% notes had previously been announced). The price was determined at 10 a.m. ET on April 20 using a formula based on a fixed spread over the yield of a previously announced reference security. Assuming the payment date for the tender offer is May 4, the company will pay $1,042.90 per $1,000 principal amount of 9½% notes, which includes accrued and unpaid interest up to, but not including, the payment date, as well as a $20 per $1,000 principal amount consent payment for holders who tendered their notes (and thus gave consent to proposed indenture changes) before the now-passed consent deadline.

Holders tendering their notes after the consent deadline but before the expiration stand to receive $1,022.90 per $1,000 principal amount, which includes accrued and unpaid interest but which does not include the consent payment.

The actual purchase price for the notes may be higher or lower, based on this formula, depending on the actual payment date for the tender offer.

On April 23, LaBranche said that it had extended the tender offer from the original May 3 deadline to midnight ET on May 10, after announcing plans to sell $460 million principal amount of new senior notes due 2009 and senior notes due 2012 in a Rule 144A transaction, with some of the proceeds to be used to fund the tender. It said the tender offer was being extended to coincide with the anticipated settlement date of the proposed sale of the notes.

LaBranche said closing of the tender offer would be subject to conditions, including receipt by the company of enough proceeds from the sale of new senior notes to finance the tender offer. The tender for each series of notes would be subject to the now-fulfilled requirement that holders of at least a majority of the outstanding principal amount give consent to the indenture amendments. The tender for each series of notes is not conditional on the other.

Credit Suisse First Boston LLC is the dealer manager and solicitation agent for the tender offer and consent solicitation (800 820-1653 or collect at 212 538- 4807). Morrow & Co. Inc. is the information agent (800 607-0088, collect at 212 754-8000 or LAB.info@morrowco.com).

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