Small appliance maker Salton, Inc. announced that it has entered into an agreement in principle with Angelo, Gordon & Co., L.P. to participate in a private debt exchange offer for the outstanding 10.75 percent 2005 notes due Dec. 15, 2005 and the outstanding 12.25 percent notes due April 15, 2008.
Under the terms of the exchange offer, which would be made available to qualified holders of 2005 notes and, subject to proration, 2008 notes, tendering holders would receive an aggregate principal amount of new notes under a Salton second lien credit facility as follows:
with respect to tendered 2005 Notes, the exchange ratio will range from 0.60 to 0.675 depending on the aggregate principal amount of the 2005 notes tendered in the Exchange Offer. The exchange ratio will be the sum of 0.60 and the Incremental 2005 Note Participation Percentage. The "Incremental 2005 Note Participation Percentage" will be the product of 0.075 multiplied by the ratio of the amount, if any, by which the aggregate amount of 2005 notes tendered in the exchange offer exceeds $75 million, over $50 million; provided that if the aggregate principal amount of 2005 notes tendered for exchange does not exceed $75 million, the Incremental 2005 Note Participation Amount will be zero.
with respect to tendered 2008 Notes, the exchange ratio will be 0.60.
The maximum aggregate principal amount of new notes to be issued under the second lien credit facility in the exchange offer would not exceed $110 million. The second lien credit facility would mature on Jan. 15, 2008 and would bear interest at LIBOR plus 7 percent, payable semi-annually in cash.
In addition, for each $1,000 of new notes issued to a holder of 2005 notes and/or 2008 notes in the exchange offer, such holder would also receive:
1.3636 shares of Series C Preferred Stock with a liquidation preference equal to $100.00 (the aggregate number of shares of the Series C Preferred Stock to be issued if the maximum of $110 million of new notes are issued in the exchange offer would be 150,000 with an aggregate liquidation preference of $15 million); provided that fractional shares would be paid in cash.
20.58 shares of Common Stock (the aggregate number of shares of Common Stock to be issued if the maximum of $110 million of new notes are issued in the exchange offer would be 2,263,880); provided that fractional shares would be paid in cash. The shares of Common Stock would be subject to a registration rights agreement with Salton.
Upon the closing of the exchange offer, a new independent board member designated by the holders of a majority of the notes tendered would be added to Salton's board of directors, which board member would be reasonably acceptable to the existing board of directors of Salton.
In connection with the exchange offer, each tendering holder of 2005 Notes would consent to an amendment to the indenture governing the 2005 Notes to remove substantially all of the covenants set forth in such indenture.
The closing of the exchange offer is subject to various conditions, including: all documentation necessary to consummate the exchange offer being acceptable to Angelo Gordon; holders of at least $75,000,000 of aggregate principal amount of the 2005 notes participating in the exchange offer; the execution by the senior lenders of an amendment to Salton's senior secured credit facility to, among other things, permit the exchange offer; and the execution by the indenture trustee of the amendment to the indenture governing the 2005 notes.
to Daily News