Service Corp. accepts tenders for 96.25% of 7.7% notes

By Angela McDaniels

Seattle, Nov. 28 - Service Corp. International said it received tenders for $139.047 million, or 96.25%, of its 7.7% senior notes due 2009 during a tender offer that ended on Tuesday.

Noteholders who tendered will receive $1,058.11 for each $1,000 principal amount of notes plus accrued interest up to but excluding the payment date.

Pricing was determined on Sept. 20 based on the present value of the principal and interest payments through maturity, discounted using a spread of 50 basis points over the 3 1/8% U.S. Treasury note due April 15, 2009, for a tender offer yield of 5.213%.

The payout includes a $20.00 consent payment for notes tendered by Sept. 20, the consent deadline.

Service solicited consents to amend the note indenture to eliminate substantially all of the restrictive covenants and certain events of default. The company received tenders and consents from holders of 96.17% of the notes by the consent deadline, and the supplemental indenture is now operative.

The tender offer was announced on Sept. 7 and was set to expire on Oct. 5. It was then extended to Oct. 13, Oct. 19, Oct. 26, Nov. 2, Nov. 10 and Nov. 16.

The offer was extended to coordinate with the closing of Service's acquisition of Alderwoods Group Inc. Service announced the closing of the acquisition on Tuesday.

The tender offer was made for $144.465 million of the company's 7.7% notes with Cusip numbers 817565AX2, 817565AV6 and 817565AW4. The company's other 7.70% notes due 2009 were not covered by the tender offer.

Service will use proceeds from its new $450 million senior credit facility due 2011 to fund the tender consideration, according to a company news release.

J.P. Morgan Securities Inc. was the dealer manager and solicitation agent (call collect 212 270-3994), and Global Bondholder Services Corp. was the information agent (866 470-3900, banks and brokerages call 212 430-3774).

In addition, the company said that Alderwoods received tenders for all $200 million of its outstanding 7¾% notes during its tender offer, which also ended on Tuesday.

Service is based in Houston and provides funeral products and services.

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