PRG-Schultz shortens redemption notice period for 11% notes, 10% convertibles

By Jennifer Chiou

New York, Sept. 5 - PRG-Schultz International, Inc. entered into supplemental indentures for its 11% senior notes due 2011 and its 10% senior convertible notes to allow for redemption of the securities by providing at least 15 days' notice, according to an 8-K filing with the Securities and Exchange Commission.

Previously, the company was required to provide 60 days' notice for redemption of the two notes series.

The company also obtained a waiver of certain provisions of the indenture of the 11% notes related to its execution of the previously disclosed amended and restated standstill agreement with Blum Capital Partners, LP and certain of its affiliates.

In the consent solicitation, PRG has agreed to pay each consenting holder of the 11% notes a consent fee of $2.50 per $1,000 in principal amount. The company obtained consents from about 99% of noteholders.

PRG received consents from holders of about 80% of the 10% convertibles, allowing it to simultaneously redeem both its 11% notes and 10% convertibles.

The company announced plans for modifications on July 16.

As part of its refinancing, the Atlanta-based firm involved in recovery auditing and profit improvement previously said it intends to replace its existing credit facility.

As already reported, the company entered into a conversion and support agreement with Blum Capital Partners, LP and certain of its affiliates, under which Blum will support the proposed refinancing by providing its consent in the solicitation and, if called for redemption, to convert all of the convertible notes and preferred shares it owns into common shares.

Blum additionally has agreed, as a lender under PRG's current credit facility, to support any amendment to or waiver of the relevant provisions of the credit facility to permit the simultaneous redemption of the notes.

According to the filing, Blum holds about 28% of the 11% notes, about 31% of the 10% convertibles and about 57% of the 9% preferreds.

Under the terms of the new standstill agreement, without the prior written consent of PRG's board of directors, Blum may not acquire or offer, make a proposal or agree to acquire any voting stock of the company or its subsidiaries if, after taking account of such acquisition, Blum will be the beneficial owner of more than 49.9% of the company's common stock.

Under the terms of the old standstill agreement, Blum was generally prohibited from beneficially acquiring any additional shares of the company's common stock and the limitation was lowered, on a share-for-share basis, every time Blum disposed of any shares.

PRG previously said that it is anticipated that Blum's beneficial ownership will be about 25% if all of its securities are converted into common stock.

Also, the new standstill agreement does not include any limitations on Blum's voting of the common and preferred shares of PRG.

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