HEAD subsidiary begins exchange offer, consent solicitation for €135 million 8½% notes

By Angela McDaniels

Tacoma, Wash., April 21 - HEAD NV subsidiary HTM Sport- und Freizeitgeräte AG has begun a private exchange offer and consent solicitation for its €135 million 8½ senior notes due 2014, according to a company news release.

The company is offering €350 principal amount of new 10% senior secured notes due 2014 for each €1,000 principal amount of existing notes tendered by noon ET on May 11, the early tender date.

Holders who tender after that time but before the offer expiration will receive €300 of new notes per €1,000 principal amount.

HTM will also pay accrued interest up to but excluding the settlement date.

The exchange offer and consent solicitation will expire at noon ET on May 22.

The new notes will be issued by HTM and guaranteed by HEAD, HEAD Holding Unternehmensbeteiligung GmbH and some of HTM's subsidiaries. They will be secured by pledges or charges over some inventories and trade receivables of HTM and some of its subsidiaries and, under certain circumstances, cash.

An application will be made to list the new notes on the Euro MTF Market of the Luxembourg Stock Exchange.

HTM is also soliciting consents to proposed amendments to the indenture governing the notes that will eliminate substantially all of the covenants governing the actions of the issuer and its restricted subsidiaries, eliminate or modify some events of default and modify Mares SpA's guarantee of the 8½% notes.

Holders who tender will be deemed to have given consent.

The company needs consents from holders of at least a majority of the outstanding notes in order to amend the indenture.

The private offer is being made only to "qualified institutional buyers" within the United States, as defined in Rule 144A under the Securities Act, and to persons located outside of the United States and who would be participating in any transaction in accordance with Regulation S.

HEAD said the purpose of the exchange offer is to reduce HTM's overall debt and related interest expense and to offer existing noteholders the opportunity to be secured creditors of HTM.

The company expects revenues for the first quarter will have declined by more than 10% and that its 2009 revenues will be lower than its 2008 revenues.

HEAD said that such a decline, combined with the large cash costs of its interest expense, its capital expenditures and having begun 2009 with less cash than at the same period in 2008, will result in it having to manage its working capital more aggressively.

To the extent that these actions are insufficient to fund working capital requirements, the company could be required to generate additional cash or secure additional credit facilities.

Lucid Issuer Services Ltd. (+44 20 7704 0880) is the exchange and information agent for the offer.

HEAD is an Amsterdam-based manufacturer and marketer of premium sports equipment.

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