Ply Gem Industries launches exchange offer for 9% notes due 2012

By Angela McDaniels

Tacoma, Wash., Nov. 19 - Ply Gem Industries, Inc. has begun an exchange offer for its $360 million principal amount of 9% senior subordinated notes due 2012, according to an 8-K filing with the Securities and Exchange Commission.

The company is offering up to $21,863,000 principal amount of series A senior subordinated notes due 2017 and up to $56,843,000 principal amount of series B senior subordinated notes due 2017 in exchange for up to $78,706,000 principal amount of the 9% notes.

The new series A notes and series B notes will have identical terms except for the coupon, which will be 7% for the series A notes and 12¼% for the series B notes.

Holders will receive $1,000 principal amount of new notes for each $1,000 principal amount of notes tendered by 5 p.m. ET on Dec. 3, the early tender date.

Holders who tender after that time but prior to the offer expiration, midnight ET on Dec. 17, will receive $950 principal amount of new notes for each $1,000 principal amount of notes tendered.

Each tendering holder will first receive series A notes. To the extent that the principal amount of tendered old notes exceeds $21,863,000, the principal amount of series A notes to be issued to each tendering holder will be prorated based on the total amount of old notes tendered and rounded down to the nearest multiple of $1,000.

The principal amount of the series B notes to be issued to each tendering holder will be equal to the difference between the principal amount of the old notes tendered by that holder and the principal amount of series A notes received.

Holders will also receive accrued interest up to but excluding the settlement date.

The new notes will be unsecured and will be subordinated to all of the company's existing and future senior debt, including borrowings under its senior secured asset-based revolving credit facility and its 11¾% senior secured notes due 2013.

The new notes will initially be jointly and severally guaranteed on a senior subordinated basis by parent company Ply Gem Holdings, Inc. and all its subsidiaries located in the United States other than certain unrestricted subsidiaries.

Caxton-Iseman (Ply Gem) III, LP and Caxton-Iseman (Ply Gem) IV, LP own $281,294,000 of the old notes. It is a condition to the exchange offer that these noteholders agree that instead of tendering in the exchange offer, they will exchange their notes for $78,137,000 principal amount of series A notes and $203,157,000 principal amount of series B notes following the successful completion of the exchange offer without any amendment or waiver of its terms and conditions.

The notes issued to the Caxton-Iseman noteholders will not be fungible with the new notes and will be issued under a different indenture. The Caxton-Iseman notes will have substantially identical terms as the new notes, except that they will be subordinated in right of payment to the new notes under certain circumstances.

The exchange offer is also conditioned on the receipt of at least $30 million principal amount of old notes, excluding the old notes held by the Caxton-Iseman noteholders.

The offer is being made only in the United States to holders of old notes who are "qualified institutional buyers" as defined in Rule 144A under the Securities Act, in the United States to holders of old notes who are "accredited investors" as defined in Rule 501(a) of Regulation D under the Securities Act and outside the United States to holders of old notes who are persons other than U.S. persons in reliance upon Regulation S under the Securities Act.

The information agent is D.F. King & Co., Inc. (800 967-4612 or 212 269-5550).

Ply Gem Industries is a Cary, N.C.-based manufacturer of residential exterior building products.

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