Duane Reade holders tender $205.03 million floaters, $143.29 million 9¾% notes in offer

By Angela McDaniels

Tacoma, Wash., Aug. 7 - Duane Reade Holdings, Inc. said holders tendered $205,029,000 principal amount, or 97.6%, of its $210 million senior secured floating-rate notes due 2010 and $143,291,000 principal amount, or 73.5%, of its $195 million of 9¾% senior subordinated notes due 2011.

Wholly owned subsidiaries Duane Reade Inc. and Duane Reade began tender offers and consent solicitations for the notes on July 9. The consent deadline was 11:59 p.m. ET on July 30, and the offers expired at 11:59 p.m. ET on Aug. 6.

The companies were seeking consents to amend the note indentures to remove substantially all of the restrictive covenants and, in the case of the floaters, release all of the collateral securing the notes.

As previously reported, the tenders and consents received by the consent deadline were enough to amend the indentures, and supplemental indentures have been executed.

For each $1,000 principal amount, holders received par for the floaters and $875 for the 9¾% notes. These payouts include a $30 consent payment for floaters tendered by the early deadline and a $40 consent payment for 9¾% notes tendered by that time.

Settlement occurred Aug. 7.

The offers were amended on July 24 to remove the minimum tender and consent conditions in the offer for the floaters; add a condition that Duane Reade must execute an amendment to its asset-based revolver, which will, among other things, allow the issuance of new senior secured notes; reduce the amount of 9¾% notes to be bought in the offer to $146.25 million from all $195 million previously; reduce the minimum tender condition for the 9¾% notes to 60% from 85%; and cut the tender payment for the 9¾% notes to $835 per $1,000 principal amount from $845 but increase the consent payment to $40 from $30.

The offer was conditioned upon, among other things, the funding of a $125 million preferred equity investment by Oak Hill Capital Partners, LP associates, the receipt of sufficient proceeds from offerings of new senior secured notes and new senior subordinated notes and the receipt of the required consents.

Goldman, Sachs & Co. (800 828-3182 or call collect 212 357-4692) and Banc of America Securities LLC (888 292-0070 or call collect 980 388-9217) were the dealer managers. The information agent was Global Bondholder Services Corp. (866 470-3800 or call collect 212 430-3774).

Duane Reade is the largest drugstore chain in New York.

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