Tom Brown says consent condition met in tender for 7¼% units

New York, June 28 - Tom Brown Inc. (Ba3/BB-) and its Tom Brown Resources Funding Corp. subsidiary said they had received a sufficient number of consents to proposed indenture changes from holders of the companies' 7¼% note units as part of Tom Brown's tender offer for the units.

As of the offer's consent deadline, which expired as scheduled at 5 p.m. ET on June 25 without extension, the company had received tenders of and had accepted to pay 215,700 units, representing about 96% of the total units outstanding as of the consent date, fulfilling the condition that at least a majority of the outstanding notes be tendered, with related consents. It said that it expected to make initial settlement and payment for units validly tendered by the consent deadline on June 28 and expected to make payment for any notes tendered after the consent deadline on the final settlement date, following expiration of the tender offer.

The underlying tender offer for the units meantime continues and is expected to expire on July 12, subject to possible extension.

As previously announced, Tom Brown, a Denver-based oil and gas exploration and production company, said on June 14 that it had begun a cash tender offer for any and all of its $225 million outstanding units, each made up of $512 principal amount of 7¼% senior subordinated notes due 2013 issued by Tom Brown Inc. and $488 principal amount of 7¼% senior subordinated notes due 2013 of Tom Brown Resources, and said that it was also soliciting consents to amend the notes' indentures in order to eliminate certain provisions contained in the indentures relating to restrictive covenants, events of default, and conditions to defeasance.

The company set a now-expired consent deadline of 5 p.m. ET June 25 and said that the tender offer would expire at midnight ET July 12, subject to possible extension.

It said that it would set the consideration it would offer for the units on the second business day before the consent solicitation was to expire and said that for each $1,000 principal amount of units tendered and accepted for purchase, it would offer a price based on a fixed spread of 75 basis points over the yield on the reference security, the 3 1/8% U.S. Treasury note due Sept. 15, 2008, on the pricing date. Total consideration would include a $30 per $1,000 principal amount consent payment for holders tendering their notes by the consent deadline. Holders tendering after the consent deadline would not receive the consent payment as part of their consideration.

Tom Brown said it will also pay accrued interest up to but excluding the date of payment.

The company said that holders could not tender without delivering consents and vice versa. It said that the proposed indenture changes would require the approval of holders of a majority of the notes comprising the units.

On June 23, Tom Brown said it had set the amount the company will pay in the tender offer for the units, based on the previously announced formula - $1,136.53 for each unit tendered before the consent deadline and $1,106.53 for units tendered after the consent deadline but before the expiration date.

Tom Brown also said that it was at the same time conducting a change-of-control tender offer for the notes, following its acquisition by EnCana Corp., which closed on May 24. The change-of-control offer runs through midnight ET July 12.

In the change-of-control offer, Tom Brown is offering $1,010 per unit, plus accrued interest up to but excluding the date of payment.

Merrill Lynch & Co. is dealer manager (call 888 ML4-TNDR or call collect at 212 449-4914). The information agent and depositary is Global Bondholder Services Corp. (call 866 873-7700; banks and brokers may also call 212 430-3774).

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