ADT gets consents in four note series, extends deadline for 2021 notes

By Wendy Van Sickle

Columbus, Ohio, April 12 – ADT Corp. received the requisite consents to amend the terms of its $300 million 5¼% senior notes due 2020, $1 billion 3½% notes due 2022, $700 million 4 1/8% senior notes due 2023 and $750 million 4 7/8% notes due 2042 and extended the consent solicitation for its $1 billion 6¼% senior notes due 2021, according to a press release.

The consent solicitation for the 2021 notes now will remain open until 5 p.m. ET on April 13. On Monday, the consent solicitation for all the notes was extended to noon ET on April 12, at which time consents representing 49.8% of the outstanding 2021 notes had been obtained. Consents from holders of a majority in principal amount of notes is required for passage.

The consent solicitation was originally set to expire at 5 p.m. ET on April 7.

As announced April 1, Prime Security One MS, Inc., a wholly owned subsidiary of Prime Security Services Borrower, LLC (Protection 1), began a tender offer for 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 made 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 close by June.

Consent solicitations

ADT sought 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 note series. The amendments would modify the definition of change of control and limit any required grant of capital stock as collateral for 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 to finance the acquisition if any of the five series of notes must 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.

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 purchase price for 2017 notes tendered by 5 p.m. ET on April 14, the early date, 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.

Holders who tender 2017 notes after the early deadline will receive $1,010.67 for each $1,000 principal amount.

The price for 2019 notes tendered before 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.

Those who tender 2019 notes after the early deadline will receive $1,074.18 for each $1,000 principal amount.

The tender offers will end at midnight ET at the end of April 28.

Tenders may be withdrawn at any time prior to April 14.

Exchange offer

For 2042 notes tendered for exchange by the early deadline on April 14, holders will receive $1,000 principal amount of new exchange notes for each $1,000 principal amount of existing 2042 notes. The exchange value includes an early exchange premium of $5.00 principal amount of exchange notes per $1,000 principal amount of 2042 notes.

Holders who tender for exchange 2042 notes after the early deadline will receive $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. Also, the exchange notes will have provisions mirroring the proposed amendments.

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

The exchange offers also will end April 28.

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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