Tuesday Morning plans to redeem 11% notes

New York, Oct. 14 - Tuesday Morning Corp. (Ba3) said it plans to redeem the entire $69 million of its outstanding 11% senior subordinated notes due 2007 in the fourth quarter, subject to receipt of requisite senior lender approval.

Tuesday Morning, a Dallas -based operator of closeout stores selling upscale giftware and home furnishings, said it would redeem the notes at a redemption price equal to 103.67% of the aggregate principal amount of the notes plus accrued and unpaid interest.

The company intends to fund the redemption primarily with cash on hand, and, to the extent necessary, borrowings under its senior credit facility.

Tuesday Morning said it expects to record pre-tax expenses in the fourth quarter of about $2.5 million in connection with the related redemption premium, and a non-cash write-off of around $1.4 million in unamortized financing costs currently carried on the balance sheet. These charges are expected to reduce fourth-quarter and full-year earnings by around 6 cents per diluted share.

The company also expects to realize pre-tax interest expense savings of around $6 million, or about 9 cents per diluted share, in 2004 due to the redemption of the notes.

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