UAP, United Agri Products again extend tender offers for 8¼% and 10¾% notes

New York, Oct. 22 - UAP Holding Corp. (Caa2/B-) and its wholly owned subsidiary, United Agri Products Inc. (B3/B), said they had again extended their tender offers and related consent solicitations for UAP's 10¾% senior discount notes due 2012 and United Agri Products' 8¼% senior notes due 2011.

The offers were extended to 5 p.m. ET on Nov. 2, subject to possible further extension, from the previously announced deadline for each of 5 p.m. ET on Oct. 21.

The companies said that as of 5 p.m. ET on Oct. 21, all $125 million outstanding principal amount at maturity of the UAP 10¾% notes had been tendered by their holders and not withdrawn, as well as all $225 million of the outstanding United Agri Products' 8¼% notes, unchanged from previously announced levels.

UAP and United Agri Products - a Greeley, Colo.-based distributor of seeds and agricultural chemicals - said on April 27 that they would purchase for cash any and all of UAP's 10¾% notes and United Agri Products' 8¼% notes, and would also solicit noteholder consents to proposed indenture changes eliminating most of the restrictive covenants in the respective indentures and eliminating the registration rights and liquidated damages in the registration rights agreements.

The companies initially set a consent deadline of May 7 and said the tender offers would expire at 9 a.m. ET on May 24; both deadlines were subsequently extended, the expiration deadline a number of times.

UAP initially said total consideration to be paid for the 10¾% notes would be $819.04 per $1,000 principal amount at maturity, including a $20 per $1,000 consent payment payable to holders tendering by the consent deadline. On May 7, the company said total consideration would now be calculated as the product of the accreted value of the 10¾% notes on the date that is 30 days immediately following the payment date and 116.125%, of which $20 would be the consent payment.

United Agri Products meanwhile said total consideration for its 8¼% notes would be a blended price, based upon the $1,082.50 per $1,000 principal amount price at which the company could redeem a portion of the notes with the proceeds of an equity offering, and the present value of future cash flows up to and including Dec. 15, 2007 - the first date on which the notes may be redeemed - on the notes, based on the assumption that the notes will be redeemed in full at $1,041.25 per $1,000 principal amount on that date, discounted at a rate of 137.5 basis points over the yield to maturity on the 3% U.S. Treasury note due Nov. 15, 2007.

On May 10, United Agri Products said it had set the total consideration for the 8¼% notes of $1,123.56 per $1,000 principal amount (based on an assumed payment date of May 28; this was subsequently extended). The total includes a consent payment of $20 per $1,000 principal amount, where applicable. Consideration will also include accrued but unpaid interest up to but excluding the payment date.

Holders tendering either series of notes would be required to consent to the indenture amendments and the registration rights agreement changes. Tenders of notes prior to the consent deadline could be validly withdrawn and consents revoked at any time before 5 p.m. ET on the consent deadline but not after.

The companies announced on May 11 that they had received the required amount of noteholder consents to the indenture changes and said they would promptly execute and deliver supplemental indentures to the indentures, and promptly execute and deliver amendments to the related registration rights agreements. They said the supplemental indentures and amendments to the registration rights agreement would not, however, become effective until UAP Holdings and United Agri Products accept the notes tendered.

Conditions of the tender offers include the now-fulfilled condition of receipt by the company by the consent deadline of consents from the holders of at least a majority of the outstanding principal amount of the 8¼% notes and a majority of the outstanding principal amount at maturity of the 10¾% notes. "Majority" excludes any of the notes already owned by the companies or their affiliates.

They would also be conditioned upon United Agri Products amending its existing revolver and entering into a new senior secured second-lien term loan, the net proceeds of which will be used to pay for the notes in the tender, and upon consummation of UAP Holdings' offering of Income Deposit Securities, the net proceeds of which will be used, among other things, to pay for the notes purchased in the tender offers.

On May 18, UAP said in an S-1A filing with the Securities and Exchange Commission that it plans to raise about $680 million via the sale of $640 million of IDS, along with a separate offering of $39.7 million of senior subordinated notes due 2019.

UBS Investment Bank is dealer manager (call the UBS Liability Management Group at 888 722-9555 x4210 or collect at 203 719-4210). MacKenzie Partners Inc. is the information agent (call collect at 212 929-5500 or at 800 322-2885). JP Morgan Chase Bank is the depositary for the offer.

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