By Angela McDaniels
Tacoma, Wash., May 3 - Educational Funding of the South, Inc. said holders tendered $1,219,812,500 principal amount of bonds in its exchange offer and tender offer, and it accepted $858,785,000 of the bonds.
The offers expired at 12:01 a.m. ET on April 27.
The amount of bonds accepted represents about 53% of the total outstanding principal amount of bonds issued under the indenture.
The company offered to repurchase or exchange its senior series 2007-1 A student loan-backed revenue bonds (the Libor bonds); its senior series 2003, 2004 and 2005 Florida educational loan revenue bonds and its senior series 2007-1 A student loan-backed revenue bonds (the senior auction-rate bonds); its subordinated series 2007-1 B-1 student loan-backed revenue bonds (the subordinated auction-rate bonds); and its junior-subordinated series 2003FL-C-1, 2004FL-C-1 and 2005FL-C-1 Florida educational loan revenue bonds (the junior-subordinated auction-rate bonds).
The offer results can be found in the table below.
Tender offer
In the tender offer, the company offered 100.2% of par for the senior series 2007-1 A-1 Libor bonds and par for the remainder of the Libor bonds.
In each case, this payment includes a premium of 4% for notes tendered by the early tender deadline, which was 12:01 a.m. ET on April 13.
The company will also pay accrued interest up to but excluding the settlement date.
Exchange offer
In the exchange offer, the company offered new floating-rate class A-2 notes in exchange for the existing senior auction-rate bonds and new floating-rate class B notes in exchange for the existing subordinated auction-rate bonds and junior-subordinated auction-rate bonds.
Holders will receive $1,000 principal amount of new notes in exchange for each $1,000 principal amount of senior auction-rate bonds or subordinated auction-rate bonds and $940 principal amount of new notes in exchange for each $1,000 principal amount of existing junior-subordinated auction-rate bonds.
In each case, the exchange amount includes a premium of $40 principal amount of new notes in exchange for each note tendered by the early tender deadline.
The company will also pay accrued interest (other than carry-over interest) up to but excluding the settlement date.
The settlement date for both offers is expected to be May 9. All notes acquired in the offers will be canceled.
The offers remain subject to a number of conditions, including the condition that the company is able to generate the cash necessary to complete the offers by issuing new student loan asset-backed notes, 2011-1 series.
On April 14, the company said it planned to issue new floating-rate class A-1 notes to some institutional investors and use some of the proceeds to fund the tender offer for the Libor bonds.
The total principal amount of the new floating-rate class A-1 notes is expected to be $362,174,000 to $382,174,000, the total principal amount of the new floating-rate class A-2 notes is expected to be $439,875,000 to $459,875,900, and the total principal amount of the new floating-rate class B notes is expected to be $26,918,000 to $46,918,000.
Each range is preliminary and subject to change. For the avoidance of doubt, the new floating-rate class A-1 notes will be issued in a principal amount that is equal to about 43% of the total principal amount of new floating-rate notes issued. The percentage will be 52% for the new floating-rate class A-2 notes and 4% for the new floating-rate class B notes.
The dealer managers are Morgan Stanley & Co. Inc. (212 761-0925) and RBC Capital Markets, LLC (212 618-7763). The information agent is D.F. King & Co., Inc. (212 269-5550 for banks and brokers, others call 800 848-2998). The exchange agent is Wells Fargo Bank, NA (800 344-5128, option 0).
The issuer is based in Franklin, Tenn.
Educational Funding of the South, Inc. tender and exchange offers
Student loan-backed revenue bonds, senior series
| Series | Maturity date | Bonds tendered | Bonds accepted
|
| 2007-1 A-1 | Sept. 2, 2013 | $41,287,500 | $32.011 million
|
| 2007-1 A-2 | March 1, 2016 | $400 million | $213.401 million
|
| 2007-1 A-3 | Sept. 1, 2017 | $235 million | $125.373 million
|
| Total | $676,287,500 | $370.785 million
|
|
|
| Florida educational loan revenue bonds, senior series
|
| Series | Maturity date | Bonds tendered | Bonds accepted
|
| 2003FL-A-1 | June 1, 2038 | $23.1 million | $19.55 million
|
| 2003FL-A-2 | June 1, 2038 | $42.6 million | $36.1 million
|
| 2004FL-A-1 | Dec. 1, 2039 | $40.7 million | $34.45 million
|
| 2004FL-A-2 | Dec. 1, 2039 | $16.9 million | $14.3 million
|
| 2004FL-A-3 | Dec. 1, 2039 | $24.55 million | $20.85 million
|
| 2004FL-A-4 | Dec. 1, 2039 | $17.85 million | $15.1 million
|
| 2005FL-A-1 | Dec. 1, 2040 | $15.375 million | $13.025 million
|
| 2005FL-A-2 | Dec. 1, 2040 | $36.125 million | $30.575 million
|
| 2005FL-A-3 | Dec. 1, 2040 | $25.025 million | $21.225 million
|
| 2005FL-A-4 | Dec. 1, 2040 | $51.5 million | $43.575 million
|
| Total | $293.725 million | $248.75 million
|
|
|
| Student loan-backed revenue bonds, senior series
|
| Series | Maturity date | Bonds tendered | Bonds accepted
|
| 2007-1 A-6 | June 2, 2042 | $17 million | $17 million
|
| 2007-1 A-7 | June 2, 2042 | $57 million | $57 million
|
| 2007-1 A-8 | June 2, 2042 | $10 million | $10 million
|
| 2007-1 A-9 | June 2, 2042 | $63 million | $63 million
|
| 2007-1 A-10 | June 2, 2042 | $4.1 million | $4.1 million
|
| 2007-1 A-11 | June 2, 2042 | $50.1 million | $50.1 million
|
| Total | $201.2 million | $201.2 million
|
|
|
| Student loan-backed revenue bonds, subordinated series
|
| Series | Maturity date | Bonds tendered | Bonds accepted
|
| 2007-1 B-1 | June 2, 2042 | $30.15 million | $19.6 million
|
| Total | $30.15 million | $19.6 million
|
|
|
| Florida educational loan revenue bonds, junior subordinated series
|
| Series | Maturity date | Bonds tendered | Bonds accepted
|
| 2003FL-C-1 | June 1, 2038 | $6.15 million | $6.15 million
|
| 2004FL-C-1 | Dec. 1, 2039 | $4 million | $4 million
|
| 2005FL-C-1 | Dec. 1, 2040 | $11.9 million | $11.9 million
|
| Total | $18.45 million | $18.45 million
|
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