CompuCom launches tender for 12% senior notes, floating-rate toggle notes

By Susanna Moon

Chicago, Sept. 10 - CompuCom Systems, Inc. and its parent, CHR Intermediate Holding Corp., said they began cash tender offers and consent solicitations for any and all of their outstanding $175 million principal amount of 12% senior notes due 2014 and $150 million principal amount of senior floating-rate toggle notes due 2013.

The offers end at midnight ET on Oct. 5. The consent solicitations expire at 5 p.m. ET on Sept. 21.

For each $1,000 principal amount of the notes, the total payout for the 12% notes will be based on the present value of $1,060 discounted to the settlement date from Nov. 1, 2010 plus accrued interest discounted using the bid-side yield on the 4.75% U.S. Treasury note due Oct. 15, 2010 plus a fixed spread of 50 basis points. Accrued interest is then subtracted from the total.

The total payout for the floating-rate notes is $1,005 per $1,000 principal amount.

Settlement is expected "promptly" following the expiration date, according to a press release.

CompuCom will pay a consent fee of $30 for 12% notes tendered by the consent deadline and a consent fee of $5 for floating-rate notes tendered by the consent deadline.

Holders who tender their notes are required to consent to the proposed amendments to the note indentures.

The companies are seeking consents to amend the notes to eliminate all restrictive covenants and certain events of default as well as amendments of certain other provisions and a waiver of the obligation to make change-of-control offers.

The tender offer and consent solicitation is subject to completion of a previously announced acquisition and receipt of consents from holders of a majority of the 12% notes and the execution of a supplemental indenture.

As previously announced, CHR Holding Corp. has entered into an agreement in which IIM Acquisition Corp., an affiliate of Court Square Capital Partners, would acquire CompuCom for $628 million. The deal is expected to close in the second half of 2007.

The transaction will be financed through a combination of equity from investment funds managed by Court Square and certain members of management, and debt financing provided by Bear, Stearns & Co. Inc.

Bear, Stearns & Co. Inc. is the dealer manager (877 696-BEAR or call collect 212 272-5112).

CompuCom is a Dallas-based provider of outsourced information technology services.

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