Chesapeake Corp. sets pricing in tender for 7.2% debentures

New York, Dec. 6 - Chesapeake Corp. said it set pricing in its cash tender offer for its $85 million of 7.20% debentures due March 15, 2005.

The company will pay $1,011.98 per $1,000 principal amount for notes tendered by the consent deadline of 5 p.m. ET on Dec. 2, including the $10 consent payment. For notes tendered subsequently, the payment is $1,001.98 per $1,000 principal amount.

Holders will also receive accrued interest up to but excluding the date of payment.

Chesapeake announced on Nov. 18 that it was tendering for the notes and soliciting consents to amend the note indenture to eliminate the principal restrictive covenants and allow satisfaction and discharge of any debentures not tendered.

The offer will expire at 5 p.m. ET on Dec. 20 and the deadline for the consent payment is 5 p.m. ET on Dec. 2. Holders may not tender without delivering consents and vice versa.

For tendered securities, Chesapeake is offering to pay the present value on the initial payment date of the $1,000 payable at maturity on March 15, 2005, plus the present value of interest from the last interest payment date until the maturity date, discounted using a 50 basis points over the bid-side yield of the 1.5% U.S. Treasury note due Feb. 28, 2005. Accrued interest from the last interest payment date up to but excluding the initial payment date will be subtracted from this total.

The total includes a consent payment of $10.00 per $1,000 principal amount that will only be paid to holders who tender by the consent deadline.

Pricing was set at 2 p.m. ET on Dec. 6.

The Richmond, Va., packaging manufacturer said it plans to fund the tender with proceeds from the issuance of new long-term debt or with borrowings under its existing senior bank credit facility.

The offer is subject to conditions, including the company entering into satisfactory financing and the receipt of consents from holders of 51% of the debentures.

Global Bondholder Services Corp. is the information agent (866 873-6300 or call collect 212 430-3774). Banc of America Securities LLC is the dealer manager and solicitation agent (contact High Yield Special Products at 888 292-0070 or call collect 704 388-9217).

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