Navistar noteholders' committee claims majority of 6¼% issue, demands negotiations

New York, Feb. 23 - The ad hoc committee of senior noteholders of Navistar International Corp. said it has told the company it represents holders of a majority of the $400 million of 6¼% senior notes due 2012 - and that they will not agree to the consent solicitation unless revised terms are negotiated.

If negotiations are unsuccessful, the investors said they will accelerate the notes.

The committee previously had the trustee for the notes issue a notice of default.

"The ad hoc committee has a solid majority of noteholders who are united in their effort to negotiate revised terms with Navistar," commented Andrew Rahl, Jr. of Anderson Kill & Olick, PC, counsel to the committee.

Navistar announced a tender on Feb. 21 for its $400 million principal amount of 6¼% senior notes due 2012, $250 million principal amount 7½% senior notes due 2011 and $393 million principal amount 9?% senior notes due 2006.

The company said the offer will allow bondholders who believe the company is in default to redeem their securities.

Funding will come from the company's recently announced $1.5 billion credit facility.

While the company said it disputes the default notices, it said the tender offer would allow management to focus its attention on making trucks.

The claimed default is a result of Navistar's failure to file its 10-K annual report for 2005 on time.

Navistar is offering $960.00 per $1,000 principal amount for the 6¼% and 7½% notes and $968.75 per $1,000 principal amount of the 9 3/8% notes.

For holders who tender by the consent deadline of 5 p.m. ET on March 2, the company will also make a consent payment equal to $40.00 per $1,000 multiplied by the amount of notes outstanding in the particular series of notes divided by the amount tendered by the consent deadline.

Navistar will also pay accrued interest up to but excluding the date of purchase.

Navistar is also soliciting consents to amend the notes to waive any and all defaults and events of defaults, eliminate substantially all of the material restrictive covenants, specified affirmative covenants and certain events of default and related provisions in the senior notes indentures and rescind any and all prior notices of default and/or acceleration delivered to Navistar.

Consents are needed from holders of a majority of each series of notes.

Holders may not tender without delivering consents.

The tenders end at 5 p.m. ET on March 20 unless extended.

Navistar is a Warrenville, Ill., a maker of trucks and engines.

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