Advantica cuts threshold in notes exchange, extends for 11th time

New York, March 14 - Advantica Restaurant Group, Inc. amended its exchange offer for its 11.25% senior notes due 2008, reducing the minimum amount that must be tendered for the transaction to go ahead and extended the deadline for an 11th time.

The Spartanburg, S.C. restaurant company said the exchange is now conditional on at least $60 million principal amount of the notes being tendered, reduced from $160 million previously.

As of early Thursday, $56.3 million of the notes had been tendered, Advantica said. That is the same as early Wednesday but down from levels earlier in the exchange when more than $60 million had been tendered.

Advantica also pushed back the expiry deadline for an 11th time, to 5.00 p.m. ET on March 22 from 5.00 p.m. ET on March 15.

In addition, the company has waived the requirement that old notes be tendered in multiples of $1,000. Instead, the new notes will be issued in multiples of $1,000 with cash in lieu of smaller amounts.

There are also some changes to the indentures of the new notes.

Advantica continues to offer $770 principal amount of a new 12.75% senior notes due 2007 to be jointly issued by Denny's Holdings, Inc. and Advantica per $1,000 principal amount of the existing 11.25% notes. It will issue up to $204.1 million of the new notes for up to $265.0 million of the existing debt. There is $529.6 million principal amount of the old notes outstanding.

The exchange plan has run into opposition from bondholders who have organized an unofficial committee to fight the proposal. Earlier Advantica told Prospect News the company was evaluating its options for the exchange based on bondholder feedback.

The bondholders' committee has previously said it has support of holders of approximately $400 million principal amount of the notes. That would appear to be sufficient to block the exchange as it previously stood since Advantica's offer was subject to at least $160 million of the $529.6 million outstanding notes being tendered.

The noteholders have told the company that they are not opposed to a deleveraging transaction of some type but believe "the elimination of $60 million in principal proposed by Advantica is not appropriate or fair to bondholders."

UBS Warburg LLC is dealer manager in the exchange offer.

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