Unisys issues new notes, stock and cash in exchange for $760.41 million of four series of notes

By Angela McDaniels

Tacoma, Wash., Aug. 3 - Unisys Corp. said it exchanged $760,407,000 principal amount of notes in its private exchange offers and consent solicitations, reducing its total debt outstanding by about $130 million and its 2010 debt maturities to $65 million from $300 million.

The offers for the company's $300 million 6 7/8% senior notes due 2010, $400 million 8% senior notes due 2012, $150 million 8½% senior notes due 2015 and $210 million 12½% senior notes due 2016 began on June 30.

Unisys offered to exchange the notes in private placements for new 12¾% senior secured notes due 2014 (the "first-lien notes"), new 14¼% senior secured notes due 2015 (the "second-lien notes"), $30 million in cash and up to the lesser of 73,697,327 shares of the common stock and 19.9% of the number of shares outstanding on the date the transaction closes.

In total, the company exchanged $235,085,000 of the 6 7/8% notes, $331,958,000 of the 8% notes, $133,986,000 of the 8½% notes and $59,378,000 of the 12½% notes for $384,962,000 of new 12¾% notes, $246,603,000 of new 14¼% notes, 52,421,654 shares and $30 million in cash.

Following the exchanges, $64.9 million of the 6 7/8% notes, $68.0 million of the 8% notes, $16.0 million of the 8½% notes and $150.6 million of the 12½% notes remain outstanding.

The early tender date was 5 p.m. ET on July 14, and the tender offers expired at midnight ET on July 28.

The company offered $950 principal amount of new 12¾% notes and $200 in cash for each 6 7/8% note tendered by the early tender date and $1,100 in new 12¾% notes for each note tendered after that time.

For 8% notes tendered by the early tender date, holders were offered $900 principal amount of new 12¾% notes and $100 of stock. For notes tendered after that time, holders were offered $850 principal amount of new 14¼% notes and $100 of stock.

The company offered $500 principal amount of new 14¼% notes and $250 of stock for each $1,000 principal amount of 8½% or 12½% notes tendered by the early tender date. Holders who tendered after that time were offered $450 principal amount of new 14¼% notes plus $250 of stock.

The per-share stock price is $1.5554 and was calculated based on the volume-weighted average price of Unisys' common stock for the 10 trading days ended July 8.

Holders also received accrued interest up to but excluding the settlement date.

No separate consent fee was paid in the offers.

When the offers began, Unisys noted that if more than $150 million principal amount of 6 7/8% notes were tendered prior to the early tender date, holders of those notes would receive a pro rata share of $30 million of cash and be issued an additional principal amount of new 12¾% notes in lieu of cash in excess of that pro rata share.

If more than $161.1 million principal amount of 8% notes were tendered prior to the early tender date, Unisys said, holders of those notes would receive a pro rata share of $145 million principal amount of new 12¾% first-lien notes and will be issued 14¼% notes in lieu of 12¾% notes in excess of that pro rata share.

Consent solicitation

Unisys was soliciting consents to proposed amendments to the indentures under which the notes were issued that would eliminate substantially all of the restrictive covenants and some events of default.

The company said it received enough consents to amend the indentures of the 6 7/8% notes, 8% notes and 8½% notes.

A tender of notes constituted a consent.

In order for the amendments to be effected for a series of notes, consents were required from holders of at least a majority in principal amount of that series.

Because the amendments were adopted by the 6 7/8% notes, the 8% notes and the 8½% notes, the company's U.S. real estate and the stock and debt of its domestic operating subsidiaries will be included as collateral for the new notes.

The exchange offers were not conditioned on obtaining the consents from holders of any series of notes.

The completion of each exchange offer was conditioned on the receipt of tenders for at least 40% of the principal amount of each of the 6 7/8% notes and the 8% notes.

The offers began after Unisys canceled a previous offer to exchange the notes in a private placement for new 12 5/8% senior secured notes due 2014. That offer was scheduled to expire July 1.

The company negotiated the terms of the new exchange offers with representatives of an ad hoc bondholder group that included investors holding about 40% of the notes.

The exchange offers were made within the United States only to qualified institutional buyers as defined in Rule 144A under the Securities Act and outside the United States to non-U.S. investors.

New notes

The new notes are guaranteed by Unisys Holding Corp., a wholly owned Delaware corporation that directly or indirectly holds the shares of substantially all of Unisys' foreign subsidiaries, and by the company's other material U.S. subsidiaries.

The first-lien notes and second-lien notes are secured by first-priority liens and second-priority liens, respectively, by substantially all of the company's assets, except accounts receivable that are subject to one or more receivables facilities, cash or cash equivalents securing reimbursement obligations under letters of credit or surety bonds and certain other excluded assets.

Unisys is an information technology company based in Blue Bell, Pa.

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