Dobson amends exchange for 12¼%, 13% preferreds, now offering cash, new convertibles

New York, Feb. 11 - Dobson Communications Corp. said it has amended its exchange offer for its 12¼% senior exchangeable preferred stock and 13% senior exchangeable preferred stock and is now offering cash and new series J mandatory convertible preferred stock.

The Oklahoma City-based wireless phone company added that the changes reflect "substantial discussions" with some holders of each series of the existing preferreds.

But the holders have also said that neither the original terms nor the revised terms are acceptable, Dobson reported in a news release.

Under the revised terms, Dobson is offering for each share of preferred stock $301 in cash and one share of the new mandatory convertibles.

The new mandatory convertibles will convert into 209 shares of class A common stock at the holder's option. There is an automatic conversion if the volume weighted average price of the class A common stock for any consecutive 20-day period exceeds $2.25.

The new convertibles will have a liquidation preference of the greater of $560 plus accreted value or the amount to be received on an as-converted basis. The liquidation preference will initially accrete at 1.5% and then 1% semi-annually. There is a mandatory redemption date of Nov. 1, 2013.

Previously Dobson was offering either $530.00 in cash or stock with the value of $530.00 based on the volume weighted average price for the five trading days ending on the second trading day before the expiration date of the exchange offer. The stock was subject to a minimum of 265 shares and a maximum of 353 shares. The preferreds have a liquidation preference of $1,000. Dobson had set limits on how much cash and stock it will issue.

Dobson is continuing to solicit consents from holders of each series of preferreds to amend the certificate of designation to eliminate all voting rights, other than voting rights required by law, and substantially all of the restrictive covenants and waive compliance with the provisions to be eliminated until the proposed amendments become effective or until 18 months from the expiration date of the exchange offer.

Dobson needs consents from holders of a majority of the outstanding shares of each series of preferred stock for the changes to become effective.

Dobson has eliminated the cash consent fee of $10.00 that was previously on offer for each share of preferred stock tendered.

Tenders will be deemed to include consents and delivery of consents will be considered as tenders.

Dobson will not pay accrued dividends on tendered preferreds.

Dobson currently has $45.22 million of the 12¼% preferreds and $191.364 million of the 13% preferreds outstanding.

It announced the exchange to reduce its long-term obligations, simplify its capital structure and improve the liquidity of its class A common stock.

Houlihan Lokey Howard & Zukin Capital, Inc. is dealer manager and solicitation agent for the offer.

Dobson said it has filed a registration statement for the exchange with the Securities and Exchange Commission but it has not yet become effective.

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