Tenneco Automotive tenders for 11 5/8% notes using new deal proceeds

New York, July 26 - Tenneco Automotive Inc. (B3/B-) said it will use proceeds from an offering of $500 million of new 10-year senior subordinated notes plus cash on hand to purchase its $500 million of outstanding 11 5/8% senior subordinated notes due 2009 via a tender offer and consent solicitation.

Tenneco set a consent deadline of midnight ET on Aug. 6 and said that the tender offer will expire at midnight ET on Aug. 20, with both deadlines subject to possible extension.

Tenneco, a Lake Forest, Ill.-based auto parts manufacturer, said that noteholders who tender before the consent deadline will receive $1,075.57 per $1,000 principal amount of notes tendered and accepted for purchase by the company, which includes a consent payment of $15 per $1,000 principal amount. Holders are being asked to consent to proposed indenture amendments that would eliminate all of the restrictive covenants, amend the satisfaction and discharge provision and eliminate certain default provisions.

Holders tendering after the consent deadline but before the offer expiration will receive $1,060.57 per $1,000 principal amount.

All tendering holders will receive accrued interest up to, but not including, the date of payment.

Tenneco expects to pay noteholders tendering by the consent deadline on or as soon as practicable after the first business day following expiration of the consent solicitation. Noteholders who validly tender their notes after the consent deadline would be paid on or as soon as practicable after the first business day following expiration of the tender offer.

Holders tendering their notes will be required to also consent to the proposed indenture changes.

The transactions are subject to meeting certain conditions, including market conditions, the company's receipt of tenders of outstanding notes representing at least 60% of the principal amount of the notes outstanding, execution of a supplemental indenture incorporating the proposed amendments, and consent of the company's senior bank lenders to permit the transactions on the terms proposed.

Tenneco said that these transactions are designed to reduce the company's annual interest expense by up to $17 million annually.

J.P. Morgan Securities Inc. (contact High Yield Capital Markets at 212 970-9153), Banc of America Securities LLC, Citigroup Global Markets, Inc. and Deutsche Bank Securities Inc. are dealer managers and solicitation agents. The information agent is Global Bondholder Services (212 430-3774 or 866 937-2200).

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