Realogy offers notes or convertibles in exchange for three note series

By Angela McDaniels

Tacoma, Wash., Dec. 1 - Realogy Corp. has begun private exchange offers for its $1.7 billion of 10½% senior notes due 2014, $470 million of 11%/11¾% senior toggle notes due 2014 and $875 million of 12 3/8% senior subordinated notes due 2015, according to a company news release.

The company is also soliciting consents to some amendments to the note indentures that would remove substantially all of the restrictive covenants and some default provisions. Consents are needed from the holders of at least a majority of the notes in order to amend the indentures.

Holders who tender their notes must also deliver consents.

The company is offering $1,000 principal amount of new notes for each $1,000 principal amount of notes exchanged. This includes $50 principal amount of new notes for each note exchanged by 5 p.m. ET on Dec. 13, the consent time.

Holders are being offered regular notes or 11% convertible senior subordinated notes due 2018 in exchange for the existing notes, provided that the company will issue no more than $2.2 billion of the convertibles.

The holders of the 10½% notes can choose to receive 11½% senior notes due 2017 or series A convertibles.

The holders of the toggle notes can choose to receive 12% senior notes due 2017 or series B convertibles.

The holders of the 12 3/8% notes can choose to receive 13 3/8% senior subordinated notes due 2018 or series C convertibles.

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

The exchange offers will expire at 5 p.m. ET on Dec. 29.

Prior to the settlement date, Domus Holdings Corp., the indirect parent of Realogy, will reclassify all of its existing common stock into class A common stock and class B common stock. Class B shares will have five votes each, and class A shares will have one vote each.

The convertible notes will be convertible at any time into class A common stock. The conversion rate is 975.6098 for the series A and series B convertibles and 926.7841 for the series C convertibles.

The exchange offers are conditioned on the tender of at least $2.65 billion of notes. They are not conditioned on the receipt of enough consents to make the proposed amendments.

On Nov. 30, the company entered into a support agreement with Paulson & Co. Inc., Avenue Capital Management II, LP and Apollo Management VI, LP, which collectively hold $1.95 billion principal amount, or 64%, of the existing notes.

Paulson and Apollo agreed to tender all of their notes in exchange for convertibles, and Avenue agreed to tender $250 million of its notes for regular notes and the remaining $64 million of its notes for convertibles.

The exchange offers are being made only to holders who are qualified institutional buyers or institutional accredited investors, each as defined under the Securities Act. Eligible holders can find more information at www.bondcom.com/realogy.

The information and exchange agent is Bondholder Communications Group, LLC (212 809-2663).

Realogy provides real estate and relocation services and is based in Parsippany, N.J.

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