Tenneco tenders for up to $230 million of 10¼% notes due 2013

By Laura Lutz

Des Moines, Nov. 1 - Tenneco Inc. launched a tender offer and consent solicitation for up to $230 million of its 10¼% senior secured notes due 2013.

The tender offer is part of the company's plan to reduce its interest expense, extend the maturity of some of its debt and align debt covenants among its various tranches of notes.

Tenneco is seeking consents to make the covenants in the indenture no more restrictive than comparable provisions in its 8 5/8% senior subordinated notes due 2014. Those include covenants on incurring debt and limitations on issuances and transfers of restricted subsidiary stock.

The tender offer expires at midnight ET on Nov. 30, and the consent deadline is 5 p.m. ET on Nov. 15.

For each $1,000 principal amount of notes tendered before the consent deadline, the payout will be based on the present value on the payment date of $1,051.25 plus interest payments through June 15, 2008. The payout will be determined using the yield of the 5 1/8% Treasury due June 30, 2008 plus 50 basis points. Pricing will be set at 2 p.m. ET at least 10 business days before the expiration date.

The payout includes a consent payment of $30 per $1,000 principal amount of notes. Holder submitting tenders after the consent deadline will not receive the consent payment.

Tenneco will also pay accrued interest for the notes.

If the offer is oversubscribed, tenders will be accepted on a pro rata basis.

Settlement of the tender offer depends on conditions including the receipt of the needed consents and availability of funds.

Banc of America Securities LLC (contact High Yield Special Products, collect 704 388-4813 or toll-free 888 292-0070) and Citi (collect 212 723-6106 or toll-free 800 558-3745) are the dealer managers and solicitation agents.

Based in Lake Forest, Ill., Tenneco produces emission-control and ride-control products for the automobile market.

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