SpectraSite To Commence Debt Tender Offers; Would Use Up To $340 Million In New Financing To Repurchase Certain Senior Notes
CARY, N.C.–(BUSINESS WIRE)–May 16, 2002
SpectraSite Holdings, Inc. (Nasdaq:SITE), one of the largest wireless tower operators in the United States, today announced it will shortly commence debt tender offers to repurchase certain of its senior notes. The Company intends to use up to $340 million of the proceeds of a new $350 million financing to be provided, subject to certain conditions, by Welsh, Carson, Anderson & Stowe (WCAS) to acquire bonds through a “Modified Dutch Auction.” The Company will use $10 million of the proceeds of the new financing to refinance a portion of its senior credit facility.
The Company also announced that it has entered into agreements with Cingular and SBC, subject to the successful completion of the debt tender offers and receipt of the consent of SpectraSite’s senior lenders and other third party consents, to transfer SpectraSite’s interest in 545 towers to Cingular and to reduce SpectraSite’s future commitment to sublease towers from SBC. In conjunction with these transactions as well as the termination of its build-to-suit program with Cingular and other cost-cutting measures, SpectraSite expects to incur charges in the second quarter ranging from $85 to $100 million, of which $8 to $10 million is expected to be cash.
Debt Tender Offers
The debt tender offers, expected to commence no later than Wednesday, May 22, 2002, will be for the repurchase of five issues of SpectraSite senior notes. The maximum aggregate purchase price of the offers will be $340 million and the offers will have a minimum condition requiring that the Company receive tenders for notes with an aggregate purchase price of $300 million. Subject to the satisfaction of certain conditions set forth in the Offers to Purchase, tenders will be accepted within price ranges specified by the Company. A separate offer will be made for each issue of notes. The following table sets forth, for each offer, (1) the range of prices (per $1,000 principal amount (or principal amount at maturity, as applicable) of notes) at which SpectraSite will accept tenders of the applicable series of notes, (2) the maximum amount of consideration available for each series (as to each offer, the “Maximum Offer Consideration”), (3) the aggregate outstanding principal amount (or principal amount at maturity, as applicable) of the applicable series of notes and (4) the aggregate principal amount (or principal amount at maturity, as applicable) of the applicable series of notes that SpectraSite is offering to purchase, assuming the purchase by SpectraSite of such notes at the lowest price in the range of prices specified.
Maximum Principal Principal
Offer Amount or Amount or
Price Consider- Principal Principal
Range ation Amount at Amount at
(per ($ in Maturity Maturity Sought
Series of Notes $1000) millions) ($ in millions) ($ in millions)
due 2010 $435 – $495 $50 $200 $115
due 2010 $455 – $520 $50 $200 $110
due 2008 $305 – $350 $45 $225 $148
due 2009 $255 – $290 $100 $587 $392
due 2010 $230 – $260 $95 $560 $413
Goldman, Sachs & Co. is the dealer manager for the debt tender offers. Notes tendered pursuant to an offer may be withdrawn at any time prior to the expiration date. The debt tender offers will be subject to customary conditions as well as the minimum condition.
If the debt tender offers are completed, subject to certain conditions which will be set forth in the Offers to Purchase, WCAS has agreed to fund up to $350 million of new convertible Term Notes. The new Term Notes bear interest at 12.875% per year, compounded semi-annually. Interest is payable on a semi-annual basis in cash or can be accrued and compounded at the Company’s option and can be paid in stock upon conversion. Subject to receipt of shareholder approval, the new Term Notes will be convertible into common shares at any time at a conversion price of $0.65 per share and will be entitled to vote with the common shares on an as converted basis. Holders of more than a majority of the Company’s common stock have agreed to approve the conversion and voting features of the new Term Notes. The new Term Notes will be secured by a lien on the equity of a new intermediate holding company that will co-issue the new Term Notes, and will rank second in priority to the Company’s senior secured credit facility and above all bond issues. The WCAS financing will be contingent, among other things, on the minimum condition being met, the debt tender offers being completed, and execution of an amendment to the Company’s senior credit facility which, among other things, will modify certain financial and other covenants. The WCAS financing will be subject to certain other conditions, including WCAS’ satisfaction with compensation and incentive arrangements to be adopted for the Company’s senior management, expected to include the granting of additional stock options.
WCAS currently owns approximately a 22% economic interest in SpectraSite and has three representatives on its Board of Directors. Upon consummation of the WCAS financing, WCAS will continue to have three representatives on the Company’s Board of Directors and WCAS’ voting rights associated with the new Term Notes will be capped.
Agreement with Cingular and Modifications to SBC Agreements
SpectraSite has entered into an agreement with Cingular Wireless to terminate its build-to-suit contract and to transfer SpectraSite’s sublease interests in 545 SBC Communications’ towers to Cingular. In addition, SpectraSite has modified its agreement with SBC to, upon receipt of certain third party consents, reduce its future sublease commitment by 187 towers. The Company had previously committed to subleasing an additional 894 towers from SBC. It will now commit to subleasing a maximum of 707 towers from SBC beginning in April 2003 through January 2004.
SpectraSite would receive net proceeds of $98 million at closing which will be used to reduce bank facility borrowings. In addition, SpectraSite will issue approximately 12.1 million shares of its common stock to SBC in full satisfaction of its obligations to pay the stock portion of the prepaid rent for the remaining 707 towers to be subleased from SBC and to satisfy any adjustment payments to SBC under the Agreement to Sublease. The closing of this transaction is subject to the successful consummation of the debt tender offers, the consent of SpectraSite’s senior lenders, and other customary closing conditions.
Stephen H. Clark, President and CEO of SpectraSite, said, “It is especially important in today’s difficult market to strengthen our balance sheet. A successful debt tender offer would increase our flexibility to execute our current business plan. The agreements with Cingular and SBC would also help improve our ability to align our cost structure to today’s market conditions, where near-term capital spending by wireless carriers remains uncertain. We are looking forward to a successful debt tender offer so we can capitalize on these important opportunities and bolster our long-term prospects.”
Lawrence B. Sorrel, Chairman of the Board of SpectraSite and a General Partner of WCAS, said, “SpectraSite is a fundamentally sound company that continues to generate solid operating results. WCAS is a long-term investor, and we believe SpectraSite’s future prospects remain attractive, but current conditions in the capital markets and the wireless industry make it essential to implement a comprehensive deleveraging plan that will create a viable capital structure for the years ahead.”
SpectraSite will also make private offers to bondholders that are “Qualified Institutional Buyers” to exchange the same issues of senior notes for up to $75 million of new convertible debt. The exchange offers would close after the debt tender offers and the debt tender offers are not conditioned on the exchange offers. The interest rate and conversion price of the notes offered in the exchange offers are expected to be similar to those contained in the new Term Notes. The notes offered in the exchange offer have not and will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
About SpectraSite Communications, Inc.
SpectraSite Communications, Inc. (www.spectrasite.com), based in Cary, North Carolina, is one of the largest wireless tower operators in the United States. The Company also is a leading provider of outsourced services to the wireless communications and broadcast industries in the United States and Canada. At March 31, 2002, SpectraSite owned or managed approximately 20,000 sites, including 8,015 towers primarily in the top 100 markets in the United States. SpectraSite’s customers are leading wireless communications providers and broadcasters, including AT&T Wireless, ABC Television, Cingular, Nextel, Paxson Communications, Sprint PCS, Verizon Wireless and Voicestream.
The terms and conditions of each debt tender offer will be set forth only in SpectraSite’s Offers to Purchase relating to the debt tender offers. Subject to applicable law, SpectraSite may, in its sole discretion, waive any condition applicable to any debt tender offer or extend or terminate or otherwise amend any offer. No debt tender offer is conditioned on the consummation of any other debt tender offer. This announcement is not an offer to purchase, a solicitation of an offer to purchase, or a solicitation of an offer to sell securities, with respect to any new Term Notes. Each offer may only be made pursuant to the terms of the Offers to Purchase relating to the debt tender offers and related Letter of Transmittal.
This press release and oral statements made from time to time by representatives of the Company may contain “forward-looking statements” concerning SpectraSite’s future expectations, financial and operating projections, plans and strategies, in particular regarding the funding of the new Term Notes, the consummation of the debt tender offers and the SBC and Cingular agreements, the impact of these transactions on the Company and on the Company’s expected revenue, EBITDA, capital expenditures and cash and non-cash charges. These forward-looking statements are subject to a number of risks and uncertainties. The Company wishes to caution readers that certain factors may impact the Company’s actual results and could cause results for subsequent periods to differ materially from those expressed in any forward- looking statements made by or on behalf of the Company. Such factors include, but are not limited to (i) the closing conditions for each of the transactions described in this release and the Company’s right to terminate, modify or amend any debt tender offer, (ii) market conditions and their impact on the debt tender offers, (iii) SpectraSite’s substantial capital requirements and leverage, even after the consummation of the transactions described in this release, (iv) the Company’s dependence on demand for wireless communications and related infrastructure, (v) competition in the communications tower industry, including the impact of technological developments and (vi) future regulatory actions and conditions in its operating areas. These and other important factors are described in more detail in Item 1a “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2001 and in the Company’s other SEC filings and public announcements. The Company undertakes no obligation to update forward-looking statements to reflect subsequently occurring events or circumstances.
D.F. King is the information agent and the Bank of New York is the depositary in connection with the debt tender offers. Copies of the Offers to Purchase, Letter of Transmittal and related documents may be obtained from the information agent at 1-800-431-9633 (bank and brokers call collect at 1-212-269-5550) Additional information concerning the terms of the debt tender offers may be obtained by contacting the dealer manager at 1-800-828-3182.
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