American Cellular again amends tender offer for 10% notes

By Laura Lutz

Washington, March 12 - American Cellular Corp. again modified the terms of its tender offer and consent solicitation for its 10% senior notes due 2011, according to a company news release.

The company changed the primary purpose of its proposed amendments to the note indenture. The company is now soliciting consents to remove the requirement for the company to maintain a debt-to-cash flow ratio of no more than 5 to 1, to permit the company to redeem $18.1 million principal amount of its 9½% senior subordinated notes due 2009, to increase the general restricted payments basket to $35 million from $20 million, and to permit the company to replace its existing $250 million senior secured credit facility with a new $1.05 billion senior secured credit facility.

Previously, the company was soliciting consents to amend the note indenture to remove substantially all of the restrictive covenants. Under the new proposed amendments, most of the restrictive covenants would not be deleted.

The company also changed the minimum tender condition for the offer. Settlement of the tender offer now depends on the receipt of tenders from holders of at least a majority of the notes. Previously, the company needed tenders from holders of at least 75% of the notes.

On March 6, American Cellular lowered the maximum amount of the notes that it will repurchase during its tender offer to $675 million from $900 million.

The company planned to fund the tender offer with proceeds from the sale of $425 million new senior notes and a new senior secured credit facility of up to $850 million but then cancelled the note deal on March 6, citing recent volatility in the bond markets.

American Cellular said it now plans to fund the tender offer with borrowings under a new $1.05 billion senior secured credit facility, which will replace its existing $250 million senior secured credit facility.

Also on March 6, the tender offer expiration was pushed back to midnight ET on March 19 from March 15.

The company began the tender offer and a consent solicitation to on Feb. 14.

As of March 1, holders of 97% of the $900 million outstanding notes had tendered and submitted consents, so the company said it will accept the notes on a pro rata basis.

The tender consideration is $1,065.56 for each $1,000 principal amount of notes. It was determined on March 1 based on a fixed spread of 50 basis points over the yield on the 3 7/8% U.S. Treasury note due July 31, 2007. The reference yield and the tender offer yield were 5.044% and 5.544%, respectively.

The company will also pay accrued interest up to but excluding the settlement date.

The tender consideration includes a consent fee of $30.00 per $1,000 principal amount for noteholders who tendered by 5 p.m. ET on March 1, the consent deadline.

Morgan Stanley & Co. Inc. is the dealer manager and solicitation agent (800 624-1808 or call collect 212 761-5384, attention: Tate Forrester). Bondholder Communications Group is the information and tender agent (212 809-2663, attention: Denise Conway).

American Cellular is a wholly owned subsidiary of Dobson Communications Corp., an Oklahoma City-based provider of wireless phone services to rural markets in the United States.

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