Jack Cooper to trade up to $80.45 million 10½%/11¼% PIK toggle notes

By Wendy Van Sickle

Columbus, Ohio, Nov. 2 – Jack Cooper Enterprises Inc. began an offer to exchange up to $80.45 million of its 10½%/11¼% senior PIK toggle notes due 2019, according to a press release.

For each $1,000 of notes due 2019, the company is offering a total consideration of $135 in cash and 3.5783 warrants to purchase shares of class B common stock of the company, par value $0.0001 per share. Each warrant is exercisable into one share.

The total consideration includes a $10 cash early tender premium that will be paid only to holders who tender their notes for exchange by the early deadline of 12:01 a.m. ET on Nov. 16.

Tenders may be withdrawn through the early deadline.

Holders who tender after the early deadline will receive the total consideration less the early tender premium.

The offer expires at 12:01 a.m. ET on Dec. 1. Settlement is expected to occur three days later.

About $96.9 million of the $186,705,946 of notes are held by private exchange noteholders, who have agreed not to participate in the exchange and instead to exchange their notes in a private exchange transaction, leaving holders of the $89.8 million of remaining notes eligible to participate. If the offer is oversubscribed, notes tendered for exchange will be accepted on a pro rata basis.

The company expects to fund the cash portion of the exchange using proceeds from a new $41 million senior secured term loan facility entered into by Jack Cooper Holdings Corp. with Wilmington Trust, NA as agent.

Private exchange

Concurrent with the commencement of the exchange offer, Jack Cooper entered into a note purchase agreement with certain holders that own about 51.9% of the existing notes.

Pursuant to the agreement, the private exchange noteholders agreed not to participate in the exchange offer and to exchange 100% of their notes in a private transaction expected to occur concurrently with the closing of the exchange offer.

The private exchange noteholders will receive $135 per $1,000 of notes exchanged and their pro rata portion of 346,804 exchange warrants, representing 16.39% of the company's common stock following exercise, assuming the exchange offer is fully subscribed.

If the exchange offer is not fully subscribed, the private exchange noteholders will receive their pro rata portion of an additional amount of cash equal to the total amount of cash being offered that is not paid in the exchange offer.

The private exchange is not conditioned on the closing of the exchange offer.

In connection with the private exchange, Michael Riggs, Jack Cooper’s president and chief executive officer and the beneficial owner, along with certain affiliates, of a majority of the company's voting common stock, entered into an agreement with the private exchange noteholders [other than the T. Michael Riggs Irrevocable Trust of 2014] under which Riggs agreed to purchase 100% of the exchange warrants issued in the private exchange at a total price equal to a base amount equal to $300 per $1,000 of their existing notes exchanged less the cash consideration received in the private exchange.

The purchase price may be paid in installments until Dec.31, 2017, subject to increases in the base amount up to a maximum of $340 over the period.

D.F. King & Co., Inc. (212 269-5550, 800 967-5071 or jc@dfKing.com) is the information agent for the exchange offer.

The transport distribution services provider is based in Kansas City, Mo.

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