Actuant tenders for remaining 13% notes

New York, July 1 - Actuant Corp. (B2/B+) said that it has begun a cash tender offer for any and all of the remaining $29.236 million principal amount of its outstanding 13% senior subordinated notes due 2009 and is also soliciting noteholder consents to proposed indenture changes.

The company set a consent deadline of 5 p.m. ET July 15 and said the offer would expire at 5 p.m. ET July 30. The price it will pay for the notes will be determined at 2 p.m. ET July 13 (the 12th business day before the expiration), with all deadlines subject to possible extension. Should the company extend the expiration deadline, the pricing date will also be extended.

The tender offer will be funded from borrowings under the company's $250 million credit agreement.

Total consideration that Actuant will pay for the notes will be determined using a formula based on a reference security - the 3 1/8% U.S. Treasury note due May 15, 2007 - and will include a consent payment of $30 per $1,000 principal amount of notes tendered and accepted for purchase by the company, payable to those holders who tender their notes and give consent to the proposed indenture changes by the consent deadline. Noteholders tendering after the consent deadline will receive the tender offer consideration but will not receive the consent payment. All holders validly tendering notes will also receive accrued and unpaid interest up to, but not including the payment date.

The consideration to be paid for each $1,000 principal amount of validly tender notes accepted for payment will be an amount equal to the present value on the price determination date for the notes of $1,021.70 per $1,000 principal amount (the redemption price payable for the notes on May 1, 2007, the first date on which the notes are redeemable, calculated based on the assumption that the notes will be redeemed in full on that date), discounted on the basis of a yield to this earliest redemption date. This will be equal to the sum of (a) the yield to maturity of the designated reference security as calculated by the offer's dealer manager, at the pricing deadline, plus (b) a fixed spread of 1.00%.

Tendered notes may not be withdrawn and consents may not be revoked after the consent deadline except under limited circumstances. Holders tendering their notes will be required to consent to the proposed amendments, which would eliminate substantially all of the restrictive covenants and eliminate or modify the related events of default. Holders may not tender their notes without also delivering consents.

The offer is conditioned upon the receipt by the company of consents of holders representing a majority principal amount of the outstanding notes.

As previously announced, Actuant, a Milwaukee-based diversified manufacturer of highly engineered position and motion control systems and branded tools, originally sold $200 million of the notes in July 2000 through its Actuant Finance Corp. and subsequently reduced the outstanding amount down to present levels through several repurchase transactions.

Most recently, it announced on Nov. 21, 2003 that it had repurchased $34 million of the notes during the fiscal 2003 fourth quarter ended Aug. 31, 2003 using a portion of the proceeds from its issuance of $150 million of 2% senior subordinated convertible debentures due 2023, leaving $61 million of the 13% notes still outstanding. On June 17, Actuant said that it had reduced the amount of its outstanding 13% notes by repurchasing about $32 million of the notes during the 2004 fiscal third quarter ended May 31, leaving about $29 million outstanding.

Goldman Sachs & Co. will be the exclusive dealer manager and solicitation agent (call the Credit Liability Management Group at 800 828-3182 or collect at 212 357-5680). Morrow & Co. Inc. is the information agent (call 800 607-0088 or collect at 212 754-8000.

Actuant said that the repurchase leaves $29 million of the notes still outstanding out of the $200 million originally sold in July 2000 by Actuant Finance Corp.

It said that interest expense related to the notes has declined further and will help drive future earnings and cash flow growth.

Actuant said that despite the premiums paid to repurchase the 13% notes during the quarter, cash flow was "exceptionally strong," leading to debt reduction of $19 million.

The company did not say how it funded the repurchase.

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