Brookstone wraps exchange offer for notes, now 12% unsecured due 2012

By Susanna Moon

Chicago, Oct. 13 - Brookstone Inc.'s wholly owned subsidiary Brookstone Co. Inc. said it executed a supplemental indenture amending its 12% second-lien senior secured notes due 2012.

The company sought consents to eliminate all the covenants other than those requiring payment of principal and interest on the notes, to eliminate all the events of default other than those relating to failure to pay principal and interest, to release the collateral for the notes and to change the title of the notes to 12% unsecured notes due 2012.

Investors had tendered $154,394,000 principal amount of the notes as of 5 p.m. ET on Oct. 12, the offer expiration.

The amendments will become operative when Brookstone pays for the tendered notes, which is expected to occur on Oct. 25.

Brookstone said on Oct. 6 that it had agreed to purchase all the notes tendered thus far in its purchase/exchange offer and consent solicitation.

Brookstone also waived all conditions to its obligation to acquire the notes that are tendered before the offer expired, including the condition that at least 95% of the 12% notes be tendered, which the company waived with the consent of holders of more than 66 2/3% of the 12% notes that were tendered by 5 p.m. ET on Oct. 1, the cash tender deadline.

The company offered to purchase the 12% notes for $975 in cash for each $1,000 of notes tendered or to issue 13% second-lien senior secured notes due 2014 in exchange for the 12% notes at a rate of $900 of 13% notes for each $1,000 of 12% notes.

The company said that only $20 million was available for cash purchases, and to the extent that sum is not enough to purchase all the 12% notes tendered for cash, the $20 million will be prorated.

As of 5 p.m. ET on Oct. 5, $154,278,000 of 12% notes had been tendered. Of this, holders of $151,066,000 principal amount elected to receive cash. Holders who do not elect to receive cash will receive 13% notes with a principal amount equal to 90% of the principal amount of the 12% notes they tendered.

Brookstone previously said that once it acquired the tendered 12% notes, the assets would become collateral for the new 14% notes.

The specialty retailer is based in Merrimack, N.H.

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