North Atlantic Trading exchanges some 12¼%, 9¼% notes for $134.95 million in second-lien notes

By Caroline Salls

Pittsburgh, May 10 - North Atlantic Trading Co., Inc. exchanged 76.9% of parent North Atlantic Holding Co.'s 12¼% senior discount notes due 2014 and 57% of North Atlantic Trading's 9¼% senior notes due 2012 for a total of $134.95 million in new second-lien notes, according to an 8-K filed with the Securities and Exchange Commission.

The note exchange closed on May 9.

Under the exchange agreement, holders of the 12¼% notes received $812.50 in principal amount of new second-lien notes per $1,000 principal amount of notes exchanged; and holders of 9¼% notes received $950.00 principal amount of second-lien notes for each $1,000 of notes exchanged.

The respective note indentures were amended to reflect the exchange, and the amended indentures no longer required the company and its subsidiaries to file reports with the SEC.

As previously reported, North Atlantic Trading will offer to repurchase 100% of the 10% second-lien secured notes due 2012 at 101% upon a change of control.

The second-lien notes will be redeemable on March 1, 2008 at 105%, declining to 102.5% on March 1, 2009 and thereafter declining yearly to par.

Before March 1, 2008, the second-lien notes will be redeemable at a price of 100% plus the applicable premium defined in the indenture.

In addition, North Atlantic Trading will be permitted to buy or provide funds to North Atlantic Holding to redeem and pay interest on any 12¼% discount notes outstanding after completion of the note exchange.

North Atlantic is a New York-based vendor of tobacco products.

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