DigitalNet sets pricing in tender for 9% notes

New York, Oct. 21 - DigitalNet Holdings Inc. said its subsidiary, DigitalNet Inc., set pricing in its tender offer for its 9% senior notes due 2010.

The company will pay $1,191.45 per $1,000 principal amount for notes tendered before the consent deadline. Holders who tender after that time will receive $30 per $1,000 principal amount less.

At its last announcement on Oct. 19 DigitalNet extended its tender offer for its 9% senior notes due 2010 to 12 p.m. ET on Oct. 25 from midnight ET on Oct. 20. The offer will be priced at 10 a.m. ET on Oct. 21.

On Oct. 7 DigitalNet said it had received the necessary consents to eliminate substantially all of the restrictive covenants in the indenture for its 9% senior notes due 2010.

By 5 p.m. ET on Oct. 5, the company had received tenders and consents from holders of 99% of the outstanding notes.

DigitalNet said it will execute a supplemental indenture but the changes will only become effective when it buys the notes. Tendered notes may no longer be withdrawn and consents may not be revoked.

DigitalNet said on Sept. 23 it had started a cash tender offer for any and all of its $81.25 million outstanding 9% senior notes due 2010.

DigitalNet, a Herndon, Va., provider of computer services to government organizations, is also soliciting consents to amend the note indenture to eliminate substantially all of the restrictive covenants and certain events of default.

The price per $1,000 principal amount of the notes will be determined using the yield to maturity of the 3 1/8% U.S. Treasury note due May 15, 2007 at 10 a.m. ET on Oct. 18 plus 50 basis points, with the date subsequently pushed back.

The total will include a $30 per $1,000 principal amount consent payment that will only be paid to holders who tender by the consent deadline of 5 p.m. ET on Oct. 5.

Holders who tender after that time but before the expiration date of midnight ET on Oct. 20 will not receive the consent payment. The expiration was subsequently extended.

DigitalNet will also pay accrued interest up to but excluding the payment date.

The consent solicitation requires approval from holders of a majority of the outstanding principal amount of the notes.

Holders cannot tender without delivering consents or vice versa.

The offer is subject to conditions including completion of the acquisition of DigitalNet by BAE Systems North America Inc., as announced on Sept. 11, and receipt of the consents to amend the indenture.

Wachovia Securities (704 715-8341 or 866 309-6316) and Banc of America Securities LLC (212 847-5834 or 888 292-0070) are the dealer managers and solicitation agents for the tender offer and consent solicitation. The depositary and information agent is Global Bondholder Services Corp. (212 430-3774 or 866 470-3800).

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