Tenneco gets consents needed to amend 10¼% notes, prices tender offer

By Angela McDaniels

Tacoma, Wash., Nov. 15 - Tenneco Inc. said it received tenders and consents for $474 million of its 10¼% senior secured notes due 2013.

The consents will allow the company to amend the note indenture to make the covenants no more restrictive than comparable provisions in the indenture for 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.

A supplemental indenture containing the amendments has been executed, according to a company news release.

Tenneco began a tender offer and consent solicitation for up to $230 million of the notes on Nov. 1. The consent deadline was 5 p.m. ET on Nov. 15, and the tender offer expires at midnight ET on Nov. 30.

Because the offer is oversubscribed, notes will be accepted on a pro rata basis.

The payout will be $1,087.09 for each $1,000 principal amount of notes. The total includes a consent payment of $30 for each note tendered by the consent deadline.

Noteholders will also receive accrued interest up to but excluding the settlement date, which is expected to be Dec. 3.

The payout was determined on Nov. 15 based on the bid-side yield of the 5 1/8% Treasury note due June 30, 2008 plus 50 basis points. The reference yield and offer yield are 3.581% and 4.081%, respectively.

Settlement of the tender offer is dependent on the availability of sufficient funds. Tenneco plans to use proceeds from a new issue of 8 1/8% senior notes due 2015 to fund the offer.

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

Banc of America Securities LLC (704 388-4813 or 888 292-0070) and Citigroup Global Markets Inc. (212 723-6106 or 800 558-3745) are the dealer managers and solicitation agents. Global Bondholder Services Corp. (212 430-3774 or 866 873-5600) is the information agent.

Tenneco is a Lake Forest, Ill.-based producer of emission-control and ride-control products for the automobile market.

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