Cole National completes tender for 8 7/8% notes; 100% tendered

New York, Nov. 17 - Cole National Group, Inc. said it has successfully completed its previously announced tender offer for its 8 7/8% senior subordinated notes due 2012, which expired as scheduled at 5 p.m. ET on Nov. 16, without extension. Cole said it accepted for payment $150 million of the notes, or 100% of the outstanding principal amount.

Cole National Group will pay the holders of the tendered notes a total of $181.7 million in cash, including accrued and unpaid interest.

As previously announced, Cole National, a Twinsburg, Ohio-based operator of a chain of vision care retail stores, recently acquired by Milan, Italy-based Luxottica Group SpA, said on Oct. 18 that it had begun a cash tender offer for its 8 7/8% notes and had begun soliciting consents to proposed amendments that would eliminate substantially all of the restrictive and reporting covenants, certain events of default and certain other provisions contained in the notes' indenture.

It initially set a consent deadline of 5 p.m. ET on Oct. 29 and an expiration deadline of 5 p.m. ET on Nov. 5, both of which were subsequently extended. It said that the amount to be paid for the notes would be set at 2 p.m. ET on the second business day preceding the consent deadline - originally Oct. 27, but subsequently extended.

It initially announced that the consideration would be an amount equal to the present value for the notes on the price determination date of $1,044.38 per $1,000 principal amount of notes tendered and accepted for purchase (the redemption price payable for the notes on May 15, 2007 - the first call date) discounted on the basis of a yield to the first call date equal to the sum of (a) the yield to maturity on the reference security (the 3 1/8% U.S. Treasury note due May 15, 2007), plus (b) a fixed 100-basis point spread, minus the $20 per $1,000 principal amount consent payment. The spread was subsequently reduced, and the consideration thus increased.

The company said it would additional pay the fee to noteholders tendering their notes by the consent deadline; noteholders tendering notes after the consent deadline would receive only the tender offer consideration. All tendering noteholders will also receive accrued and unpaid interest up to but excluding the date of payment.

Cole also said that the consideration to be paid for notes tendered under its change-of-control offer, triggered by the company's purchase by Luxottica would be 101% of the principal amount of such notes, plus accrued and unpaid interest.

Cole said that its obligations to accept for purchase and to pay for the notes in the tender offer are conditioned upon the company's receipt of consents to the proposed amendments from the holders of at least a majority of the principal amount of outstanding notes and the execution of a supplemental indenture incorporating the proposed indenture amendments.

On Oct. 28, Cole said that it had increased the payment it was offering for the notes, via a change in the pricing formula, and extended the consent and expiration deadlines on its offer.

The company said it would now pay a price for the 8 7/8% notes based on a yield of 75 basis points over the reference security instead of the originally announced 100 basis points.

It announced that the reference yield was 2.75%, giving a price of $1,169.85 per $1,000 principal amount for notes tendered by the consent deadline.

Goldman, Sachs & Co. (800 828-3182 or 212 357-5680) and ABN Amro Inc. (866 409-7643 or 212 409-6255) are dealer managers and solicitation agents for the 8 7/8% tender offer and the related consent solicitation. MacKenzie Partners Inc. is the information agent (800 322-2885).

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