AKI buys $91.39 million 10½% notes in tender

New York, Oct. 4 - AKI, Inc. said it bought $91.39 million or 88.3% of its 10½% senior notes due 2008 in its tender offer for the securities.

At its last announcement on Sept. 10, AKI extended its tender offer for the notes and the related consent solicitation to 5 p.m. ET on Oct. 4, subject to possible further extension, from the previous deadline of 5 p.m. ET on Sept. 24.

The company said that as of 5 p.m. ET on Sept. 9 it had received tenders and consents for 83.5% of the notes - up slightly from the 83% participation announced on Sept. 2 when the offer was last extended. The percentage of consents, as previously announced, exceeds the required number of consents needed to amend the notes' indenture. Also as previously announced, the company will pay a consent payment to all holders tendering by the now-extended deadline.

AKI, a New York-based global marketer and manufacturer of multi-sensory marketing, interactive advertising and sampling systems in the fine fragrance, cosmetics and personal care industries, as well as other consumer products industries, said on Aug. 19 that it had begun a cash tender offer for any and all of its $103.510 million of outstanding 10½% notes and was also soliciting noteholder consents to proposed indenture amendments that would eliminate substantially all of the restrictive and reporting covenants, certain events of default and certain other provisions.

The company set a consent deadline of 5 p.m. ET on Sept. 1 and originally said the tender offer would expire at 5 p.m. ET on Sept. 17; the expiration deadline was later extended.

AKI said it was undertaking the consent solicitation in connection with the previously announced transactions with affiliates of Kohlberg Kravis Roberts & Co. and DLJ Merchant Banking Partners, including the merger of AHC I Acquisition Corp., AKI's parent, with AHC Merger Inc., a wholly owned subsidiary of Fusion Acquisition LLC, and the contribution of AHC I Acquisition to Jostens Holding Corp.

The company said noteholders tendering by the consent deadline would receive a consent payment of $20 per $1,000 principal amount as part of the total consideration to be paid for the notes, which will be $1,028.75 per $1,000 principal amount. All tendering holders will also be paid accrued and unpaid interest up to but not including the payment date. The company originally said holders tendering their notes after the consent deadline would not receive the consent payment but announced on Sept. 2 that instead, all holders tendering by the expiration date would receive the consent payment.

The company also said at that time that it had received the required consents to the proposed indenture changes, with more than 83% of the notes having been tendered, with related consents by the Sept. 1 consent deadline.

AKI intends to fund the tender offer and consent payments with a portion of the proceeds from senior secured term loan and revolving credit facilities totaling up to $1.3 billion principal amount and a $500 million increasing-rate bridge loan to be secured by Jostens IH Corp., a wholly owned subsidiary of Jostens Holding Corp. (or, in lieu of the bridge loan, the incurrence of other debt by Jostens IH Corp.) in connection with the Kohlberg Kravis/DLJ transactions.

Completion of the tender offers and consent solicitations will be subject to several conditions, including the satisfaction or waiver of the conditions to the closing of the transactions, and the receipt by AKI of consents to the proposed amendments from the holders of at least a majority of the total principal amount of outstanding notes, and the execution of a supplemental indenture to the indenture governing the notes.

Credit Suisse First Boston LLC is the dealer manager and solicitation agent (212 538-0652 or 800 820-1653). MacKenzie Partners Inc. is the information agent (800 322-2885).

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