Conn’s looks to alter restricted payment terms for 7¼% notes, tighten make-whole call period

By Susanna Moon

Chicago, Oct. 23 – Conn’s, Inc. said it began a consent solicitation to shorten the make-whole call period under its 7¼% senior notes due 2022 and alter the restricted payment terms.

The amendments would change the restricted payments provisions under the notes indenture by

• Amending the beginning of the accounting period to Nov. 1 from May 1, 2014 from which consolidated net income is calculated for purposes of determining the size of the “builder basket” or “restricted payment basket” exception to the restricted payments limitation; and

• Increasing the dollar threshold exception to the restricted payments limitation to $375 million from $75 million.

That would constitute the part 1 amendments, according to a company press release.

Conn’s also is asking to amend the earliest date for redeeming the notes without paying a make-whole premium or being limited to redeeming no more than 35% of the original par amount of notes with the proceeds from an equity offering to July 15, 2018 from July 15, 2017, which will make up the part 2 amendments.

For the part 1 amendments, the cash payment would be $17.00 for each $1,000 principal amount of notes for which consents are delivered if the company receives consents for a majority of the outstanding notes.

The company said it intends to pay the part 1 consent fee “promptly” after execution of a supplemental indenture. The approval of the part 2 amendments is not a condition to the adoption of the part 1 amendments.

There is no consent fee for the part 2 amendments, and those amendments will only be adopted if the part 1 amendments are approved and with the receipt of consents from all holders of the outstanding notes.

The consent solicitation will end at 5 p.m. ET on Oct. 29. Holders must be of record as of 5 p.m. ET on Oct. 22.

Consents may be revoked at any time before the earlier of the offer expiration and the time at which the part 1 consents have been received.

The company said it has entered into a consent solicitation support agreement with beneficial holders representing about 54% of the principal amount of notes outstanding to consent to the amendments.

The tabulation agent is D.F. King & Co., Inc. (212 269-5550).

US Bank NA is the trustee.

Conn’s is a Woodlands, Texas-based specialty retailer of furniture, mattresses, home appliances and consumer electronics and a provider of consumer credit.

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