Cleaver-Brooks wraps offer for 12¼% notes; no more tenders obtained

By Susanna Moon

Chicago, Dec. 24 - Cleaver-Brooks, Inc. said it settled all $183,255,000, or 99.06%, of its 12¼% senior secured notes due 2016 tendered by 5 p.m. ET on Dec. 7, the consent deadline, on Dec. 19.

The tender offer and consent solicitation expired at 11:59 p.m. ET on Dec. 21.

There were no additional tenders since the early deadline, according to a company press release.

As noted before, the total purchase price was $1,103.62 for each $1,000 principal amount of notes, including a $30.00 consent payment, tendered by the early tender date.

Holders also received accrued interest to the payment date.

Pricing for the offer was set at noon ET on Dec. 10 using a yield to May 1, 2013 on the 0.625% U.S. Treasury note due April 30, 2013 plus a fixed spread of 50 basis points, minus accrued interest to but excluding the early payment date. The tender yield was 0.12%.

Those who tendered after the early deadline would not have received the consent payment.

As reported, the offer and solicitation were made in connection with a stock purchase agreement, under which an affiliate of investment funds managed by Harbour Group Industries, Inc. acquired all of the outstanding stock of Cleaver-Brooks from Wellspring Capital Partners IV, LP.

In connection with the offer, Cleaver-Brooks also solicited consents to amend the notes to eliminate or modify substantially all of the restrictive covenants and events of default, to shorten the minimum redemption notice period to three days from 30 days and to release the liens on the assets securing the notes.

Holders who tendered their notes needed to consent to the proposed amendments, and holders who consented to the proposed amendments needed to tender their notes.

The tender offer and the solicitation were contingent upon completion of the acquisition under the stock purchase agreement, tenders and consents for at least a majority of the outstanding notes and the execution of a supplemental indenture to the notes.

As reported before, Cleaver-Brooks plans to redeem all $1,745,000 of the remaining notes on Dec. 24.

The notes will be redeemed at par plus the greater of 1% of par and the excess, if any, of the present value at the redemption date of the redemption price of such notes on May 1, 2013, which is 106.125% of the principal amount of the notes to be redeemed, plus all required interest payments due on the notes through May 1, 2013, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over the principal amount. The price will also include accrued interest to the redemption date.

RBC Capital Markets, LLC (877 381-2099 or 212 618-7822) was dealer manager and solicitation agent. Global Bondholder Services (866 470-4300) was depositary and information agent.

Cleaver-Brooks is a Milwaukee-based manufacturer of packaged and engineered boilers. It launched the offer on Nov. 27.

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