Continental Global extends exchange for 11% notes

New York, Sept. 2 - Continental Global Group Inc. said it has extended its exchange offer for all its existing $120 million principal amount of 11% senior notes due 2007 to 5 p.m. ET on Sept. 17 from 5 p.m. ET on Sept. 2.

As of the old expiration date, holders had tendered $98.215 million or 81.8% of the existing notes.

Continental Global announced the exchange on Aug. 5 saying it was offering cash and new notes for all its existing $120 million 11% notes.

The Winfield, Ala., manufacturer of bulk handling equipment said it will pay to existing holders a total of $17.5 million in cash, $65 million principal amount of series A 9% senior secured notes due 2008 and $10 million principal amount of series B 13% pay-in-kind senior secured notes due 2008.

Continental Global said it is carrying out the exchange because it does not presently generate sufficient cash flow from operations to service the interest on its existing debt. If the exchange is not completed, the company may not be able to continue as a going concern, according to a T-3 filing with the Securities and Exchange Commission.

The exchange will cut the company's annual cash interest expense to $9.5 million from $15.3 million.

For each $1,000 principal amount of the existing notes, holders will receive $770.83 made up of $145.83 in cash, $541.67 of the series A notes and $83.33 of the series B notes.

The cash will be made in two installments, $15.5 million on the payment date and $2 million 12 months later.

The new notes will be secured by a second priority lien on substantially all of the assets of the company and its two principal U.S. operating subsidiaries, Continental Conveyor & Equipment Co. and Goodman Conveyor Co., except for the stock of non-U.S. subsidiaries.

Continental Global is also soliciting consents to amend the indenture for the old notes to eliminate substantially all the restrictive covenants and some other provisions. Notes may not be tendered without delivering consents. No additional payment will be made for consents.

Continental Global said that under an agreement with N.E.S. Investment Co. and Wayzata Investment Partners LLC, Wayzata has agreed to tender $82.115 million principal amount of the old notes, 68.4% of the amount outstanding.

The exchange is subject to all the old notes being tendered and approval of the company's bank lenders. Continental Global may change the terms but may not reduce the participation threshold below 95% without Wayzata's approval.

Morrow & Co. Inc. is the information agent, and Wells Fargo Bank NA is the exchange agent.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.