ION Media launches exchange offer, consent solicitation for 14.25%, 9.75% preferreds

By Jennifer Chiou

New York, June 8 - ION Media Networks, Inc. announced the start of an exchange offer for any and all of its 13.25% cumulative junior exchangeable preferred stock, which is currently accruing dividends at 14.25%, and any and all of its 9.75% series A convertible preferred stock.

The company said it will issue new 11% series A mandatorily convertible senior subordinated notes due 2013 and, depending on participation levels in the exchange, either new 12% series A-1 mandatorily convertible preferred stock or 12% series B mandatorily convertible preferred stock.

The exchange offer is part of the company's previously announced recapitalization plan.

Linked to the offer, ION is also soliciting consents to amend the certificate of designations of the preferreds to eliminate all voting rights, other than voting rights required by law; its obligation to repurchase the senior preferred stock upon a change of control; all redemption rights; in the case of the 14.25% preferred stock, all exchange rights; and substantially all of the restrictive covenants.

The company is also seeking consent to the new issues, including the 12% series A-1 convertible preferred stock, which would rank senior to any unexchanged preferreds.

For each tendered share of the 14.25% preferreds, holders will receive $7,000 principal amount of 11% series A notes and $1,000 initial liquidation preference of the 12% series A-1 convertible preferreds.

For each tendered share of the 9.75% preferreds, holders will receive $4,000 principal amount of 11% series A notes and $1,000 initial liquidation preference of 12% series A-1 convertible preferreds.

However, if holders of 50% or less of either series of preferreds tender in the exchange offer and, as a result, ION does not receive the requisite approvals for its proposed amendments, holders will instead receive:

• For each tendered share of the 14.25% preferreds, $7,500 principal amount of 11% series A notes and $500 initial liquidation preference of 12% series B convertible preferreds, which would rank junior to any unexchanged senior preferreds; and

• For each tendered share of the 9.75% preferreds, $4,500 principal amount of 11% series A notes and $500 initial liquidation preference of 12 series B convertible preferreds.

In order to participate in the exchange, holders must tender all shares of 14.25% preferred stock and 9.75% preferred stock that they own and deliver the related consents.

The offer and consent solicitation will expire at 12:01 a.m. ET on July 10.

As already reported, on May 4, ION entered into an agreement with affiliates of Citadel Investment Group, LLC and NBC Universal, Inc. for a comprehensive recapitalization of ION that includes taking the company private.

Under the deal, NBC Universal is transferring to Citadel the call right on Bud Paxson's controlling shares it acquired in November 2005 and Citadel will exercise the call right, hold a cash tender offer and invest $100 million to fund ION's future growth and digital investment plans. The tender offer was slated to expire on June 1.

NBC Universal will continue to hold a minority interest following the restructuring.

On May 3, the ad hoc committee of ION's 14.25% preferred stockholders expressed "outrage at the conduct of the company and its directors with respect to their recent acts and omissions."

At the time, David Friedman, counsel to the committee, in a letter to ION counsel Jay Goffman, said, "The company is patently and demonstrably unable and, more regrettably, unwilling, to meet its contractual obligations to our clients. The preferred stock has already matured, thereby causing more than $600 million to be due and payable to the holders of preferred stock from legally available funds."

The letter also accused the company of squandering "millions of dollars and seemingly endless efforts futilely pursuing an ill-conceived transaction with NBCU/Citadel."

D.F. King & Co., Inc. is the information agent (800 431-9643).

Based in West Palm Beach, Fla., ION is a network television broadcast company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.