Reader's Digest sets pricing, gets required consent for 6½% notes due 2011

By Jennifer Chiou

New York, Feb. 8 - The Reader's Digest Association received the necessary consents to amend its $300 million 6½% senior notes due 2011, according to a company news release.

The company is soliciting consents to eliminate substantially all of the restrictive covenants and certain events of default in the note indenture. Reader's Digest added that it has executed a supplemental indenture.

As of 5 p.m. ET on Feb. 7, the consent deadline, holders of $299.89 million, or 99.96%, of the notes had delivered consents.

For each $1,000 principal amount, the company said it will pay $1,039.95, an amount that was determined using the 4.625% Treasury due Feb. 29, 2008 and 50 basis points. The reference yield was 5.058%, and the tender yield was 5.558%.

The tender payment includes a $30.00 consent payment for noteholders who tendered by the consent deadline.

The company said it will also pay accrued interest to the purchase date.

The offer ends at 8 a.m. ET on Feb. 23. It began on Jan. 25.

The offer is conditioned on, among other things, the acquisition of the company by an investor group led by Ripplewood Holdings LLC, sufficient financing and consents from a majority of noteholders.

J.P. Morgan Securities Inc. (call collect 212 270-3994) and Merrill Lynch, Pierce, Fenner & Smith Inc. (888 654-8637 or call collect 212 449-4914) are the dealer managers. Global Bondholder Services Corp. (866 470-4300 or call collect 212 430-3774) is the information agent.

Reader's Digest is a Pleasantville, N.Y., publisher and direct marketing company.

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