AmerisourceBergen to repay debt with note sale proceeds

AmerisourceBergen Corp. said Wednesday (Nov. 13) that it plans to redeem or repay several two series of notes using the proceeds of the $300 million of new 7¼% senior notes due 2012 that it sold on Tuesday (Nov. 12).

The Valley Forge, Pa.-based pharmaceutical services company said that the proceeds from the sale of the notes initially will be used to repay amounts borrowed under the company's revolving credit facility, which is part of its senior credit facility.

Subsequently in fiscal 2003, AmerisourceBergen intends to repay $150 million in aggregate principal amount of Bergen 7 3/8% senior notes coming due in January 2003, and to repay $15 million of term loans under its senior credit facility. The company also intends to redeem approximately $124 million in aggregate principal amount of PharMerica 8 3/8% senior subordinated notes due 2008.

Viskase exchange offer for 10¼% '01 notes expires; company to restructure under voluntary Chapter 11

Viskase Cos. Inc. said on Wednesday (Nov. 13) that its previously announced offer to exchange new debt and preferred shares for its outstanding 10¼% senior notes which came due on Dec. 1, 2001 (but which were not repaid at that time) expired as scheduled at 5 p.m. ET on Nov. 4, with no further extension. As of the expiration deadline, $141.314 million principal amount of the existing notes, or 86.7% of the outstanding amount, had been tendered under the terms of the exchange offer, falling short of the requirement that all of the outstanding notes be tendered.

The company also said that as of that expiration, consent to previously announced plans to restructure Viskase via a voluntary Chapter 11 filing on economic terms essentially the same as those outlined under the exchange offer had been received from the holders of $112.101 million principal amount of the existing notes, representing 68.7% of the principal amount of notes outstanding, 91.4% of the principal amount of notes that voted in the solicitation and 91.4% of the number of holders of senior notes that voted in the solicitation. That fulfills the condition that a majority of the holders of the notes, representing at least two-thirds of the outstanding principal amount, consent to the company's plans for the bankruptcy filing.

Wells Fargo Bank Minnesota, National Association, was the exchange agent for the offer. Morrow & Co. Inc. (call 800 607-0088) was the information agent.

Having received the required level of noteholder consents to its restructuring plans, Viskase accordingly further announced that it had filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court to seek confirmation of a prepackaged plan of reorganization previously announced and already approved by the required number of holders and principal amount outstanding of the existing notes.

The Chapter 11 filing covers Viskase Companies, Inc. only, and does NOT include any of its domestic or foreign operating subsidiaries, which will continue to provide an uninterrupted supply of products and services to customers worldwide. Trade creditors and vendors will be totally unaffected and will continue to be paid in the ordinary course of business, and the operating subsidiaries' employees will be paid all wages, salaries and benefits on a timely basis. Viskase has asked the Bankruptcy Court for an expedited confirmation hearing in order to allow it to emerge from bankruptcy as soon as practicable.

AS PREVIOUSLY ANNOUNCED, Viskase, a Willowbrook, Ill.-based maker of cellulose sausage casings and other food packaging materials, said on July 16 that it had executed a restructuring agreement with the ad hoc committee of holders of its 10¼% notes regarding the restructuring of those notes. Under the terms of the proposed restructuring, the company's wholly owned operating subsidiary, Viskase Corp. would be merged with and into Viskase Cos. Inc., which would be the surviving corporate entity. The outstanding senior notes would be exchanged for new 8% senior secured notes due 2008 and shares of Series A preferred stock, to be issued by the restructured company on a basis of $367.96271 principal amount of the new notes (i.e., a total of $60 million) and 126.82448 shares of preferred stock (i.e., a total of 20,680,000 shares or 94% of the preferred stock) for each $1,000 principal amount of the existing senior notes.

Viskase said that the $60 million of new notes would pay interest semi-annually (except annually with respect to year four and quarterly with respect to year five), with interest payable in principal amount of new notes (i.e. pay-in-kind) for the first three years. Interest for years four and five would be payable in cash to the extent of available cash flow, as defined, and the balance in principal amount of new notes. After that, the interest would be payable in cash. The new notes would be secured by a first lien on the assets of the company, post-merger, and would be subject to subordination of up to $25 million for a secured working capital credit facility for the company.

It also said that the new Series A preferred shares would pay a 6% cumulative dividend. Its holders would vote on an as-converted basis on all matters together with Viskase's common stockholders. The preferred shares would also have a liquidation preference of $5 per share and be convertible into common stock at any time at a price of 20 cents per share. Upon conversion, the preferred shares would represent about 97% of the common stock. Accrued but unpaid dividends, at time of conversion, would be convertible into common stock upon the same basis. At Viskase's option, the preferred shares would be automatically converted into common stock on the same basis in connection with a public offering of securities by the company of not less than $50 million. Preferred stock dividends would be payable in cash to the extent that Viskase is legally, contractually and financially able to pay dividends.

The proposed exchange offer would be subject to acceptance by holders of 100% of the outstanding senior notes, unless that requirement is waived by Viskase and the waiver if approved by the Ad Hoc Committee of current noteholders. The Committee members, collectively holding approximately 54% of the senior notes, agreed to accept the proposed exchange offer. The exchange offer would include a solicitation for a Chapter 11 plan for the company. If less than 100% of the outstanding senior notes were to accept the exchange offer but sufficient senior notes were to be exchanged to satisfy the voting requirements for acceptance of a Chapter 11 plan, the company would commence a voluntary Chapter 11 proceeding and submit a Chapter 11 plan containing substantially the terms set forth in the exchange offer.

In the event the exchange offer is consummated through a bankruptcy proceeding, the company's current common stock would be canceled and new common stock would be issued, with 94% going to the current senior noteholders and the remaining 6% to the company's management. Holders of old common stock would meantime receive warrants to purchase shares of new common stock equal to 2.7% of the company's common stock. Assuming all warrants are exercised, holders of the senior notes would receive approximately 91.5% of the new common stock and approximately 5.8% would go to the company's management. Thus, the consideration received by all noteholders would be substantially the same regardless of whether the proposed restructuring occurs via an exchange offer or a prepackaged Chapter 11 plan.

Viskase further said that upon completion of the proposed restructuring, the company's board of directors would be reconstituted to consist of five members, including the Company's Chief Executive Officer and four other persons designated by the ad hoc committee of current senior noteholders.

The members of the ad hoc committee have agreed to support the proposed restructuring, including exchanging their senior notes and taking such other reasonable actions as necessary to consummate the proposed restructuring. In addition, the members of the ad hoc committee have agreed not to transfer (other than to another member of the ad hoc committee or an affiliate of a member) their shares of the new preferred stock for a period of two years after the exchange offer is completed, and for a period of one year thereafter, the company would have a right of first refusal to either purchase or designate a purchaser for shares of preferred stock to be transferred by a member of the ad hoc committee to a person other than another member of the ad hoc committee or their affiliates.

On Aug. 20, Viskase said in a Securities and Exchange Commission filing that it was beginning an offer to exchange new debt and preferred shares for the 10¼% notes under the previously announced restructuring agreement. It said the exchange offer, on the previously announced terms, would expire at 5 p.m. ET on Sept. 19, although this was subsequently extended, and that already tendered notes could be withdrawn any time up till then. Viskase said that if fewer than all of the existing notes were to be tendered, but at least two-thirds of the outstanding principal amount of the notes were tendered by a majority in number of the holders of all of the notes, it would then have to attempt to effect a prepackaged plan of reorganization under the Bankruptcy Code which would be substantially similar in economic effect to the exchange offer. Viskase said it was also soliciting noteholder consents to that plan concurrently with the exchange offer.

Viskase subsequently extended the exchange offer, first to Oct. 18, and then to Nov. 4. As of the the announcement of the latter extension, on Oct. 21, $141.265 million principal amount of the existing notes had been tendered, representing 86.6% of the principal amount outstanding, (up from $136.649 million, or 83.8%, as of the original expiration deadline of Sept. 19). It also said that consents to the company's previously announced prepackaged plan of reorganization had been received from the holders of $115.436 million principal amount of the notes, or 70.8% of the amount outstanding (up from $112.948 million, or 69.3% previously).

Lexington Precision extends exchange offer for 12¾% notes

Lexington Precision Corp. said on Wednesday (Nov. 13) that it had again extended its previously announced offer to exchange new debt, plus stock-purchase warrants and a participation payment, for its outstanding 12¾% senior subordinated notes which came due in 2000 but which were not redeemed at that time. The offer was extended to midnight ET on Dec. 4, subject to possible further extension, from the previous Nov. 15 deadline.

Lexington said that as of Nov. 13, holders had tendered $27,209,125 of the notes, or slightly more than 99% of the outstanding amount, unchanged from the amount announced on Oct. 31. While that has satisfied the 99% minimum tender condition to the exchange offer, the company said that a number of other conditions have not yet been satisfied, including the completion of a new senior secured credit facility on terms satisfactory to the company.

AS PREVIOUSLY ANNOUNCED Lexington Precision, a New York-based manufacturer of rubber and metal components for the automobile and medical devices industries, said on July 10 that it had begun an exchange offer for its $27.412 million of outstanding 12 ¾% notes. Under the terms of the exchange, which is open only to holders of record (as of July 1) of the existing notes, the company would give them a principal amount of new 11½% senior subordinated notes due 2007 equal to the sum of the principal amount of the outstanding 12¾% notes, plus the accrued interest on those notes from Aug. 1 1999, through April 30 of this year. The company said that accrued interest would total $350.625 per $1,000 principal amount of the existing notes. If all of the outstanding existing notes were to be tendered and the exchange offer completed Lexington Precision would issue new 11½% notes to cover a total of $9.611 million of accrued interest from the existing notes.

Lexington Precision initially said that the exchange offer would expire at midnight ET on Aug. 7, although this deadline was subsequently extended. It said that interest on the new 11½% notes would accrue from May 1 of this year; interest for the three-month period ended July 31 would be paid on the issue date of the 11½% notes, and after that, would be payable quarterly on each November 1, February 1, May 1, and August 1. The company said that holders of the new 11½% notes would also receive a participation fee equal to $22.20 per $1,000 principal amount of 11½% notes issued, payable in three equal installments on Sept. 30, 2002, Dec. 31 and March 31, 2003. Lexington will also issue to the holders of the new notes warrants to purchase 10 shares of common stock per $1,000 principal amount of notes; the warrants would allow their holders to buy the stock at a price of $3.50 per share at any time during the period from Jan. 1, 2004 through Aug. 1, 2007. Prior to Jan. 1, 2004, the warrants will not be detachable from the 11½% notes and will be transferable only as part of a unit with the notes.

The company said that the exchange offer is being undertaken as part of a larger comprehensive financial restructuring plan that would also involve an extension of the company's 10 ½% senior notes and 14% junior subordinated notes, and a refinancing of the company's senior, secured credit facilities. It said that completion of the exchange offer would be subject to a number of conditions, including the refinancing of Lexington's other debt on satisfactory terms. Completion of the exchange offer would also be subject to the condition that at least 99% of the outstanding 12¾% notes be tendered for exchange and not withdrawn. The company warned that if the exchange offer is completed, it does not presently intend to pay principal or accrued interest on any untendered 12¾% notes. It further said that the exchange offer reflects an agreement in principle that it reached with the four largest holders of its 12¾% notes, who among them control a total of $20.49 million of the 12¾% notes, or 74.7% of the $27.412 million outstanding.

On Aug. 7, the company extended the expiration of the exchange offer to 12 midnight ET on Aug. 30, and on Aug. 30, it said that it had again extended the offer to midnight ET on Sept. 30 and said that it had received tenders of $27,131,875 of the notes, or 98.98% of the outstanding amount, just shy of the 99% minimum tender condition. On Sept. 30, Lexington announced the further extension of the offer to 12 midnight ET on Oct. 18, and said that it had received tenders of $27,208,875 of the notes, or slightly more than 99% of the outstanding amount, satisfying the minimum tender condition to the consummation of the exchange offer. On Oct. 18, the company announced the further extension of the offer to 12 midnight on Oct. 31, subject to possible further extension, and said that as of Oct. 18, some $27,209,125 of the notes, or slightly more than 99% of the outstanding amount, had been tendered.

On Nov. 1, the company announced the further extension of the offer to midnight ET on Nov. 15, subject to possible further extension, from the previous Oct. 31 deadline. It reported the same level of noteholder participation in the offer as previously.

Western Gas Resources plans to redeem preferred stock

Western Gas Resources Inc. said in its 10-Q quarterly filing with the Securities and Exchange Commission on Tuesday (Nov. 12) that it plans to issue a notice of redemption of all of the remaining shares of its $2.28 cumulative preferred stock currently outstanding, at a liquidation preference of $25 per share plus accrued and unpaid dividends, for a total of $14 million.

The Denver-based independent natural gas producer, gatherer, processor, transporter and energy marketer said that the date fixed for the redemption will be at least 30 days from the notice of redemption, and will be funded with amounts available under the company's revolving credit facility. It said that the capitalized offering costs of $639,000 associated with the redeemed preferred stock will be reflected as a special dividend to preferred shareholders in the 2002 fourth quarter and will accordingly reduce earnings available to common shareholders in that quarter by approximately two cents per common share.

Range Resources outlines 8 ¾% '07 note repurchases

Range Resources Corp. said on Tuesday (Nov. 12) in its quarterly 10-Q filing with the Securities and Exchange Commission that it had repurchased $3.7 million face amount of its outstanding 8 ¾% senior subordinated notes due 2007 for cash in the market, mostly at a discount, during the three-month period that ended on Sept. 30. It had purchased a total of $8.7 million face amount of the notes during the nine-month period ended Sept. 30. During that same nine-month period, Range Resources exchanged $875,000 face amount of the 8¾% notes for 183,000 shares of common stock.

Range Resources, a Fort Worth, Texas-based Independent oil and gas company, also said that in the three-month period ended Sept. 30, 2001, it had repurchased $10 million face amount of the notes in the market at a discount, and had repurchased $35 million face amount in the nine-month period ended Sept. 30, 2001.

As of Oct. 31, 2002, $69.6 million of the 8¾% notes remained outstanding.

The company also outlined its repurchases during the three- and nine-month periods of its 6% convertible subordinated debentures due 2007 and its 5¾% trust convertible preferred securities.

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