ADT seeks waiver under senior notes, launches tender, exchange offers

By Marisa Wong

Morgantown, W.Va., April 1 – ADT Corp. has begun consent solicitations from holders of its outstanding $300 million 5¼% senior notes due 2020, $1 billion 6¼% senior notes due 2021, $1 billion 3½% notes due 2022, $700 million 4 1/8% senior notes due 2023 and $750 million 4 7/8% notes due 2042, according to a Friday press release.

At the same time, Prime Security One MS, Inc., a wholly owned subsidiary of Prime Security Services Borrower, LLC (Protection 1), launched tender offers to purchase any and all of ADT’s outstanding $750 million of 2¼% notes due 2017 and $500 million of 4 1/8% senior notes due 2019 as well as an offer to exchange new 4 7/8% first-priority senior secured notes due 2032 for any and all of ADT’s outstanding 2042 notes.

The consent solicitations, tender offers and exchange offer are being conducted in connection with and conditioned on the closing of the previously announced acquisition of ADT by Protection 1.

However, the completion of the solicitations and offers are not conditions to the acquisition being completed. Also, each of the consent solicitations, tender offers and the exchange offer is not contingent on completion of the other transactions.

The acquisition is expected to be completed by June.

Consent solicitations

ADT is seeking consents from holders of the five series of notes for a waiver of any potential change-of-control triggering event, including any potential obligation of ADT to make a change-of-control offer, as well as amendments to the indentures governing each series. The amendments would modify the definition of change of control and limit any required grant of capital stock as collateral with respect to the notes, in each case in connection with the acquisition.

Protection 1 does not expect that it will be required to make change-of-control offers in connection with the acquisition. However, Protection 1 has obtained financing commitments in an amount sufficient to fully finance the acquisition in the event that any of the five series of notes are required to be repaid or repurchased as a result of a change of control.

The waiver and proposed amendments require consents from holders of a majority in principal amount of each series, voting as a separate class, excluding any notes owned by ADT or any of its affiliates.

Holders who consent to the waivers and proposed amendments on or prior to 5 p.m. ET on April 7, the consent deadline, will be eligible to receive the consent fee. The consent fee for each $1,000 principal amount is $2.50 for the 2020 and 2021 notes, $5.00 for the 2022 and 2023 notes and $1.00 for the 2042 notes.

Tender offers

The consideration for 2017 notes tendered by 5 p.m. ET on April 14, the early deadline, will be $1,015.67 for each $1,000 principal amount, which includes an early tender premium of $5.00 per $1,000 principal amount.

The consideration for 2017 notes tendered after the early deadline but prior to midnight ET at the end of April 28, the expiration time, will be $1,010.67 for each $1,000 principal amount.

The consideration for 2019 notes tendered prior to the early deadline will be $1,079.18 for each $1,000 principal amount, which includes an early tender premium of $5.00 per $1,000 principal amount. The consideration for 2019 notes tendered after the early deadline but prior to the expiration time will be $1,074.18 for each $1,000 principal amount.

Tenders may be withdrawn at any time prior to April 14.

Exchange offer

The consideration for 2042 notes tendered in the exchange offer prior to the early deadline on April 14 will be $1,000 principal amount of new exchange notes for each $1,000 principal amount of existing 2042 notes. The consideration includes an early exchange premium of $5.00 principal amount of exchange notes per $1,000 principal amount of 2042 notes.

The consideration for 2042 notes tendered for exchange after the early deadline but prior to the expiration time on April 28 will be $995 principal amount of exchange notes per $1,000 principal amount of 2042 notes.

The exchange notes will be identical to the existing 2042 notes except that they will mature in 2032 and they will benefit from guarantees, security interests and a reporting covenant. Additionally, the exchange notes will have provisions mirroring the proposed amendments described above.

As a result, the acquisition will not constitute a change-of-control under the exchange notes.

Deutsche Bank Securities Inc. is the solicitation agent for the consent solicitations and dealer manager for the tender offers and exchange offer. Barclays, Citigroup Global Markets Inc. and RBC Capital Markets, LLC are co-solicitation agents for the consent solicitations and co-dealer managers for the tender offers and exchange offer.

D.F. King & Co. Inc. (212 269-5550 for brokers and banks, 866 416-0576 for all others, adt@dfking.com) is the tender and information agent.

ADT is a Boca Raton, Fla.-based provider of security and automation solutions. Protection 1 is also a security company and is based in Chicago. Following the acquisition, the combined company’s key brands will be ADT and ADT Pulse, with the Protection One brand being maintained in select channels.

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