The terms of the Exchange Offers were initially described in a confidential offering memorandum and consent solicitation statement, dated July 17, 2012
The Companies have revised the consideration being offered to holders of Old Senior Subordinated Notes and Discount Notes as described in the Offering Memorandum as set forth in the table below. The Companies are revising the Exchange Offers to offer 11%/13% PIK toggle second priority senior secured notes due 2020 of Media (the “Second Priority Senior Secured Notes”) and warrants to purchase shares of Class A common stock, par value $0.001
Holders who previously tendered Old Notes for the consideration described in the Initial Offering Memorandum and the Prior Supplements will be deemed to have tendered for the consideration described in the Offering Memorandum Supplement. Holders of Discount Notes who have previously tendered Discount Notes will also be deemed to have kept the same selection previously made between Second Priority Senior Secured Notes (formerly Second Priority Secured Springing Subordinated Notes) and Holdings Notes. If Holders who previously tendered Old Notes do not desire to receive the consideration described in the Offering Memorandum Supplement they must withdraw the tender of their Old Notes prior to the Withdrawal Deadline (as described below).
Initially, only those holders that validly tendered their Old Notes prior to the previously scheduled early tender date of 4:59 p.m. ExchangeConsideration per$1,000 PrincipalAmount of Discount NotesTendered if Holders of SuchNotes Elect toReceive Second Priority Senior Secured Notesinstead of Holdings Notes ExchangeConsideration per $1,000 PrincipalAmount ofDiscount NotesTendered ifHolders of Such Notes Elect toReceive HoldingsNotes instead of Second PrioritySenior Secured Notes Media’s 11%/13% PIK Toggle Second Priority Senior Secured Notes due 2020(1)
Liberman Broadcasting’s Warrants to purchase shares of its Class A common stock, par value $0.001
$600 in Second Priority Senior Secured Notes(2) and up to 0.000685788 Warrants(3) Media’s 11%/13% PIK Toggle Second Priority Senior Secured Notes due 2020(1)(5)(6) (1)Â Â If at least a majority of the principal amount of the Old Senior Subordinated Notes are validly tendered and accepted (and not withdrawn) in the Exchange Offers, interest on the Second Priority Senior Secured Notes (x) on or prior to November 15, 2015, will accrue from the issue date of the Second Priority Senior Secured Notes, at the election of Media prior to each applicable interest period, at a rate of (i) 11% per annum, payable in an amount equal to 8.5% per annum payable in cash, plus an amount equal to 2.5% per annum in additional PIK Second Priority Senior Secured Notes or (ii) 13% per annum, payable in an amount equal to 4.00% per annum payable in cash, plus an amount equal to 9.00% per annum in additional PIK Second Priority Senior Secured Notes and (y) from and after November 15, 2015, will accrue at a rate of 11% per annum, payable in an amount equal to 8.5% per annum payable in cash, plus an amount equal to 2.5% per annum in additional PIK Second Priority Senior Secured Notes; provided that the last interest payment will be entirely in cash.
If less than a majority of the principal amount of the Old Senior Subordinated Notes are validly tendered and accepted (and not withdrawn) in the Exchange Offers, interest on the Second Priority Senior Secured Notes will accrue from the issue date of the Second Priority Senior Secured Notes at a rate of 11% per annum, payable in kind. (2)  Participating holders of Old Senior Subordinated Notes will receive accrued and unpaid interest, if any, on their accepted Old Senior Subordinated Notes up to, but not including, the Settlement Date in the form of Second Priority Senior Secured Notes and rounding of such amount to the nearest $1,000 principal amount of Second Priority Senior Secured Notes. (3)  If all outstanding Old Senior Subordinated Notes are properly tendered and accepted (and not withdrawn), holders of Old Senior Subordinated Notes will receive 0.000685788 Warrants per $1,000 principal amount of Old Senior Subordinated Notes validly tendered (and not withdrawn) and accepted in the Exchange Offers. The amount of Warrants a tendering Old Senior Subordinated Notes holder will receive per $1,000 principal amount of Old Senior Subordinated Notes validly tendered (and not withdrawn) and accepted in the Exchange Offers is dependent on the percentage of Old Senior Subordinated Notes that are validly tendered (and not withdrawn) and accepted in the Exchange Offers and is based on the following formula:                (OS / TN) * [35% * [1 / (1 â (35% * PP)), where: OS   =     the number of shares of Class A common stock, par value $0.001, of the Parent (“Class A common stock”) plus shares of Class B common stock, par value $0.001, of the Parent (the “Class B common stock”) outstanding on the Settlement Date (as defined in the Offering Memorandum). There are 291.36922 shares of Class A common stock and Class B common stock outstanding as of the date of this press release. TN  =     the aggregate principal amount of Old Senior Subordinated Notes outstanding on the Settlement Date divided by $1,000. The aggregate principal amount outstanding of Old Senior Subordinated Notes as of the date of this press release is $228,775,000. PP  =     the percentage of Old Senior Subordinated Notes that are validly tendered (and not withdrawn) and accepted in the Exchange Offers.
The aggregate amount of Warrants delivered to each participating holder for all Old Senior Subordinated Notes validly tendered (and not withdrawn) and accepted by Media will be rounded down, if necessary, to the nearest one millionth (0.0001). This rounded amount will be the amount of Warrants you will receive, and no additional cash or Second Priority Senior Secured Notes will be paid in lieu of any amount of Warrants not received as a result of rounding down. (4)  The aggregate principal amount of Discount Notes at maturity is $68.4 million. In 2010, 2009 and 2008, Holdings purchased approximately $3.6 million, $1.0 million and $22.0 million, respectively, aggregate principal amount of its Discount Notes in various open market transactions and, as a result, Holdings currently holds $26.6 million aggregate principal amount of its outstanding Discount Notes. As such, the total principal amount due to noteholders, other than Holdings, was $41.8 million as of September 30, 2012. (5)  The aggregate principal amount of Second Priority Senior Secured Notes that may be issued in exchange for any and all validly tendered and accepted (and not withdrawn) Discount Notes may not exceed $9.8 million, which, if necessary, will be allocated on a pro rata basis among validly tendered and accepted (and not withdrawn) Discount Notes. The proration procedures are set forth in the Third Supplement to the Confidential Offering Memorandum and Consent Solicitation Statement dated October 18, 2012. (6)  Participating holders of Discount Notes will receive accrued and unpaid interest, if any, on their accepted Discount Notes up to, but not including, the Settlement Date in the form of either Second Priority Senior Secured Notes or Holdings Notes, consistent with the New Notes that such holder elected to receive in exchange for such holder’s Discount Notes, and rounding of such amount to the nearest $1,000 principal amount of Second Priority Senior Secured Notes or Holdings Notes, as applicable.
The terms of the Second Priority Secured Notes (formerly the “Second Priority Secured Springing Subordinated Notes”) have been revised so that such notes will not be subordinated in right of payment to all existing and future senior debt of Media and the applicable subsidiary guarantor, regardless of the amount of Old Senior Subordinated Notes validly tendered in the Exchange Offers. Previously the terms of the Second Priority Senior Secured Notes (formerly Second Priority Secured Springing Subordinated Notes) required that such notes become subordinated in right of payment to all existing and future debt of Media and the applicable subsidiary guarantor if at least a majority of the principal amount of the Old Senior Subordinated Notes were validly tendered and accepted (and not withdrawn) in the Exchange Offers. Accordingly, the Second Priority Senior Secured Notes will now be equal in right of payment to Media’s and the applicable subsidiary guarantors’ existing and future debt, including Media’s 9¼% Senior Secured Notes due 2019 (the “First Priority Senior Secured Notes”), regardless of the amount of Old Senior Subordinated Notes tendered in the Exchange Offers.
If all of the Old Senior Subordinated Notes are validly tendered and accepted in the Exchange Offers, the Warrants will be issuable for up to 35% of the outstanding common stock of the Parent, but could be reduced to no less than 25% of the outstanding common stock if Media elects to pay interest on the Second Priority Senior Secured Notes at a rate of 11% per annum, payable in an amount equal to 8.5% per annum payable in cash, plus an amount equal to 2.5% per annum in additional PIK Second Priority Senior Secured Notes (a “Cash Pay Election”), which Cash Pay Election is only available if at least a majority of the principal amount of the Old Senior Subordinated Notes are validly tendered and accepted (and not withdrawn) in the Exchange Offers. For each instance that Media makes a Cash Pay Election on the Second Priority Senior Secured Notes (up to and including the interest payment date of November 15, 2015
Media has also withdrawn its solicitation of consents for the previously proposed amendments to the indenture governing the Old Senior Subordinated Notes. Â The Companies are amending certain other terms of the Exchange Offers, as more fully described in the Offering Memorandum Supplement.
The Companies announced today additional preliminary results of the Exchange Offers and the solicitation of Discount Note Consents. As of 5:00 p.m.
The Exchange Offers and solicitation of Discount Notes Consents remain subject to the satisfaction or waiver of the Exchange Offer Conditions (as defined in the Offering Memorandum). As discussed above the Companies have reached agreements with parties that represent a majority of the aggregate principal amount of the Old Senior Subordinated Notes and the Discount Notes, pursuant to which such parties have validly tendered, or have agreed to validly tender, their respective Old Senior Subordinated Notes and Discount Notes, as applicable, and have delivered, or have agreed to deliver, their Discount Notes Consents to the Proposed Amendments to the Discount Notes Indenture, if applicable. In addition, as discussed below, holders of approximately $212.0 million
Old Notes may still be tendered and Discount Notes Consents may still be delivered until midnight, New York City
Concurrently with the Exchange Offers, Media is also soliciting consents (the “Solicitation Consents”) from holders of its First Priority Senior Secured Notes to certain amendments to the indenture governing the First Priority Senior Secured Notes (the “First Priority Senior Secured Notes Consent Solicitation”). The terms of the First Priority Senior Secured Notes Consent Solicitation have also been amended to, among other things, reflect the new terms of the Exchange Offers and increase the interest rate payable on the First Priority Senior Secured Notes to 10.25% per annum regardless of the principal amount of the Old Senior Subordinated Notes that are validly tendered and accepted (and not withdrawn) in the Exchange Offers.  The expiration date for the First Priority Senior Secured Notes Consent Solicitation is extended to midnight, New York City
The terms of the solicitation of Solicitation Consents are described in the Consent Solicitation Statement, dated July 17, 2012
If Media receives the requisite consents to the First Priority Senior Secured Notes Consent Solicitation, Media will execute a supplemental indenture (the “Supplemental Indenture”) on or soon after the First Priority Senior Secured Notes Consent Solicitation Expiration Date, but not later than the date the Exchange Offers are consummated. The Supplemental Indenture, by its terms, will become effective only upon the consummation of the Exchange Offers.  The New Notes and the Warrants will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be transferred or sold in the United States
This press release shall not constitute a solicitation of consents, an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful. No recommendation is made as to whether holders of the securities should tender their securities or give their consent. This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Media’s, Holdings’ and Parent’s current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Media, Holdings and Parent undertake no obligation to update or revise any forward-looking statements to reflect developments or information obtained after the date of this press release, except as required by law.