Cole National tenders for 8 7/8% notes, will redeem 8 5/8% notes

New York, Oct. 18 - Cole National Group Inc. said that it has begun a cash tender offer for any and all of its $150 million of outstanding 8 7/8% senior subordinated notes due 2012 and has begun soliciting noteholder consents to proposed amendments that would eliminate substantially all of the restrictive and reporting covenants, certain events of default and certain other provisions contained in the notes' indenture.

The company has also begun a separate offer to repurchase the 8 7/8% notes under the change-of-control provision in the notes' indenture in the wake of the recently completed merger of the company's direct parent, Cole National Corp., into Colorado Acquisition Corp., a wholly owned subsidiary of Luxottica Group SpA, Cole National's purchaser.

Cole set a consent deadline of 5 p.m. ET on Oct. 29 and said the tender offer and the change-of-control offer would both expire at 5 p.m. ET on Nov. 5, with all deadlines subject to possible extension.

The Twinsburg, Ohio-based retail eyecare center chain operator said tender offer consideration to be paid for validly tendered notes would be set at 2 p.m. ET on the second business day preceding the consent deadline (i.e., Oct. 27). It would be an amount equal to the present value for the notes on the price determination date of $1,044.38 per $1,000 principal amount of notes tendered and accepted for purchase (the redemption price payable for the notes on May 15, 2007 - the first call date) discounted on the basis of a yield to the first call date equal to the sum of (a) the yield to maturity on the reference security (the 3 1/8% U.S. Treasury note due May 15, 2007), as determined by the standard market practice, plus (b) a fixed 100-basis point spread, minus the $20 per $1,000 principal amount consent payment.

The consent payment will be paid in addition to the tender consideration to any noteholders tendering their notes by the consent deadline; noteholders tendering notes after the consent deadline will receive only the tender offer consideration and no consent payment. All tendering noteholders will also receive accrued and unpaid interest up to but not including the date of payment for the notes.

Cole said that the consideration to be paid for notes tendered under its change-of-control offer will be 101% of the principal amount of such notes, plus accrued and unpaid interest, if any, from the last interest payment to but not including the settlement date.

Cole said that its obligations to accept for purchase and to pay for the notes in the tender offer are conditioned upon the company's receipt of consents to the proposed amendments from the holders of at least a majority of the principal amount of outstanding notes and the execution of a supplemental indenture incorporating the proposed indenture amendments.

Cole also announced that it intends to redeem all its $125 million of outstanding 8 5/8% senior subordinated notes due 2007 at the redemption price of 101.4375%. Cole also plans to include a change-of-control offer, as required by the notes' indenture, in the wake of Luxottica's acquisition of Cole.

Goldman, Sachs & Co. (800 828-3182 or 212 357-5680) and ABN Amro Inc. (866 409-7643 or 212 409-6255) are dealer managers and solicitation agents for the 8 7/8% tender offer and the related consent solicitation. MacKenzie Partners Inc. is the information agent (800 322-2885).

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