PRG-Schultz extends exchange offer for $125 million of 4.75% convertibles

New York, March 2 - PRG-Schultz International, Inc. said it extended its exchange offer for its $125 million of outstanding 4.75% convertible subordinated notes due 2006.

The expiration is now 10 a.m. ET on March 16 instead of 5 p.m. ET on March 2.

As of March 2, holders had tendered $97.0 million or 77.6% of the existing notes.

PRG-Schultz announced off on Feb. 1 as part of a comprehensive financial restructuring of its capital structure.

The company is offering to exchange the $125 million convertible notes for $125 million of new securities consisting of $50 million of new 11% senior notes due 2011, $60 million of new 10% senior convertible notes due 2011 and new series A convertible participating preferred stock with a liquidation preference of $15 million.

At the time, the company said holders of 54.6% of the outstanding convertibles have committed to tender their notes in the exchange offer.

Under the terms of the exchange offer, the company will issue in exchange for each $1,000 in convertible notes tendered $400 of new 11% senior notes due 2011, $480 of new 10% senior convertible notes due 2011 and one share, $120 liquidation preference, of the new series A convertible participating preferred.

The new senior convertible notes and new series A convertible preferred stock will be convertible into common stock at the election of the holder.

The exchange offer is subject to a 99% minimum acceptance level of the convertible notes in the exchange offer, the refinancing of the company's existing senior secured credit facility and bridge loan, and some other conditions.

In addition, PRG-Schultz has secured a financing commitment from Ableco Finance LLC for a new $45 million senior secured credit facility that will be used to refinance the company's existing senior secured credit facility and $10 bridge loan and to fund the company's general working capital needs.

The new credit facility will consist of a $25 million term loan and a $20 million revolving credit facility, and the availability will be determined under an agreed borrowing base formula.

Funding of the new credit facility is subject to a number of conditions, including the successful consummation of the exchange offer.

After completion of the restructuring, existing common shareholders will own 54.1% of the equity of the company.

If all of the new senior convertible notes are converted into common stock following completion of the restructuring, existing common shareholders would own 30% of the equity of the company.

PRG-Schultz is an Atlanta-based firm involved in recovery auditing and profit improvement.

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