Georgia-Pacific buys $2.4 billion notes, debentures in tender

By Jennifer Chiou

New York, Dec. 23 - Georgia-Pacific Corp. announced it accepted tenders for $2.4 billion of debt securities issued by itself and its Fort James Corp. subsidiary as follows:

• $347.41 million or 99.26% of its $350 million of 7 3/8% senior notes due 2008;

• $697.345 million or 99.62% of its $700 million of 8 7/8% senior notes due 2010;

• $766.423 million or 98.89% of its $775 million of 9 3/8% senior notes due 2013;

• $77.013 million or 51.34% of its $150 million of 8% senior notes due 2014;

• $279.571 million or 93.19% of its $300 million of 6 7/8% senior notes due 2007;

• $29.953 million or 97.52% of its $30.715 million of 9¼% debentures due 2021; and

• $83.561 million or 94.96% of its $88 million of 7¾% debentures due 2023.

On Dec. 22, the company announced it will pay (including the $20 per $1,000 consent payments):

• $1,058.73 per $1,000 principal amount for its 7 3/8% notes;

• $1,125.83 per $1,000 principal amount for its 8 7/8% notes;

• $1,118.87 per $1,000 principal amount for its 9 3/8% notes;

• $1,106.79 per $1,000 principal amount for its 8% notes;

• $1,035.17 per $1,000 principal amount for its 6 7/8% notes;

• $1,411.21 per $1,000 principal amount for its 9¼% debentures; and

• $1,271.41 per $1,000 principal amount for its 7¾% debentures.

The company said it expected to complete its acquisition by Koch Industries, Inc. on Dec. 23.

On Dec. 21, Georgia-Pacific said it again extended its tender offer, this time to midnight ET on Jan. 6 from midnight ET on Jan. 5. The offer previously had been extended from midnight ET on Jan. 4 and midnight ET on Dec. 30.

The company also said it again changed the pricing date, this time to 2 p.m. ET on Dec. 22 from 2 p.m. ET on Dec. 21. The pricing date already had been extended from 2 p.m. ET on Dec. 20 and 2 p.m. ET on Dec. 16.

On Dec. 2, the company said it received the necessary consents to amend the indentures to eliminate restrictive covenants and noted it executed a supplemental indenture - which will only become effective when it buys the notes as part of the completion of the upcoming acquisition of Georgia-Pacific by Koch Forest Products, Inc. - and a waiver of the need for a change-of-control offer, which goes into force immediately.

Georgia-Pacific, which began the tender on Nov. 17, said the tenders are part of the company's acquisition by an indirect wholly owned subsidiary of Koch Industries.

The offers are conditioned upon completion of the merger after Koch Forest Products' tender offer for Georgia-Pacific's shares. Koch Forest Products will use the proceeds of merger financing facilities to fund the tenders.

For each $1,000 principal amount of notes, Georgia-Pacific paid the present value on the notes' earliest redemption date, discounted using: the yield to maturity of the 3¼% Treasury due Aug. 15, 2008 and 50 basis points for the 7 3/8% senior notes due 2008; the yield to maturity of the 6½% Treasury due Feb. 15, 2010 and 50 bps for the 8 7/8% senior notes due 2010; the yield to maturity of the 5½% Treasury due Feb. 15, 2008 and 50 bps for the 9 3/8% senior notes due 2013; and the yield to maturity of the 3¼% Treasury due Jan. 15, 2009 and 50 bps for the 8% senior notes due 2014.

For each $1,000 principal amount of notes, Fort James paid the present value on the notes' earliest redemption date, discounted using: the yield to maturity of the 4% Treasury due Aug. 31, 2007 and 30 bps for the 6 7/8% senior notes due 2007; the yield to maturity of the 5 3/8% Treasury due Feb. 15, 2031 and 75 bps for the 9¼% debentures due 2021; and the yield to maturity of the 5 3/8% Treasury due Feb. 15, 2031 and 75 bps for the 7¾% debentures due 2021.

The payouts included a $20.00 per $1,000 principal amount of notes consent payment for those who tendered their holdings before 5 p.m. ET on Dec. 1, the consent date.

Citigroup Corporate and Investment Banking (800 558-3745) and Goldman, Sachs & Co. (800 828-3182 or call collect 212 357-3019) are the dealer managers and solicitation agents.

Global Bondholder Services Corp. is the information agent (call collect 212 430-3774 or 866 952-2200).

Georgia-Pacific is an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals.

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