Bon-Ton unit offers 10 5/8% notes due 2017 in exchange for 10¼% notes

By Susanna Moon

Chicago, June 4 - Bon-Ton Stores, Inc. said its wholly owned subsidiary Bon-Ton Department Stores, Inc. began an offer to exchange its outstanding 10¼% senior notes due 2014 for newly issued 10 5/8% second-lien senior secured notes due 2017.

The total purchase price will be par of new notes for each $1,000 principal amount of old notes tendered by the early deadline at 5 p.m. ET on June 15. The total purchase price includes an early tender premium of $30 per $1,000 of notes.

The exchange offer will end at midnight ET on July 3. Tendered notes may be withdrawn by the early date.

Holders who tender their notes after the early date will receive $970 principal amount of new notes per $1,000 of old notes.

The company also will pay accrued interest in cash to but not including the settlement date.

Bon-Ton also is soliciting consents to amend the notes.

There is no minimum tender condition, and the exchange offer is not conditioned on the completion of the consent solicitation. However, if consents from holders of a majority of the old notes are not received, interests in new second-lien secured loans, and not new notes, will be delivered in exchange for the notes tendered in the offer.

Holders who tender their notes in the offer will be deemed to have submitted consents.

The new notes will be secured by a second-priority lien on substantially all of the current and future assets of Bon-Ton and certain subsidiaries of Bon-Ton.

The purpose of the exchange offer is to enhance Bon-Ton's financial flexibility by refinancing the old notes to 2017, according to a company press release.

The offer is only for holders who are qualified institutional buyers under Rule 144A or not a U.S. person under Regulation S.

D. F. King & Co., Inc. (800 848-3416 or call collect 212 269-5550 or e-mail bonton@dfking.com) is the information agent.

The issuer is a York, Pa.-based department store operator.

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