Tender-Offer Statement — Issuer Tender Offer — Schedule TO
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC TO-I Shoney's, Inc. Schedule to and Schedule 13E-3 With 14± 52K
Respect to Shoney's Lyons and Tpi
Debentures
2: EX-1 Exhibit (A)(1) to Schedule to and Schedule 13E-3 52± 203K
3: EX-2 Exhibit (A)(2) to Schedule to and Schedule 13E-3 18± 75K
4: EX-3 Exhibit (A)(3) to Schedule to and Schedule 13E-3 19± 77K
5: EX-4 Exhibit (A)(4) to Schedule to and Schedule 13E-3 4± 17K
6: EX-5 Exhibit (A)(5) to Schedule to and Schedule 13E-3 4± 17K
7: EX-6 Exhibit (A)(6) to Schedule to and Schedule 13E-3 2± 13K
8: EX-7 Exhibit (A)(7) to Schedule to and Schedule 13E-3 3± 14K
9: EX-8 Exhibit (A)(8) to Schedule to and Schedule 13E-3 3± 16K
10: EX-9 Exhibit (A)(9) to Schedule to and Schedule 13E-3 3± 17K
11: EX-10 Exhibit (A)(10) to Schedule to and Schedule 13E-3 4± 20K
12: EX-11 Exhibit (A)(11) to Schedule to and Schedule 13E-3 2± 12K
13: EX-12 Exhibit (B) to Schedule to and Schedule 13E-3 15± 57K
14: EX-13 Exhibit (D)(1) to Schedule to and Schedule 13E-3 6± 29K
15: EX-14 Exhibit (D)(10) to Schedule to and Schedule 13E-3 7± 30K
EX-1 — Exhibit (A)(1) to Schedule to and Schedule 13E-3
Exhibit Table of Contents
PURCHASE OFFER AND CONSENT SOLICITATION STATEMENT
SHONEY'S, INC.
OFFERS TO PURCHASE FOR CASH ANY AND ALL OF THE OUTSTANDING
8-1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2002, CUSIP NO. 872623 AA 1
AND
LIQUID YIELD OPTION NOTES DUE 2004 (ZERO COUPON - SUBORDINATED), CUSIP NO.
825039 AC 4
AND CONSENT SOLICITATION WITH RESPECT TO THE RELATED INDENTURES
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THESE OFFERS WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON
AUGUST 14, 2000, UNLESS EXTENDED (SUCH TIME AND DATE, AS IT MAY BE
EXTENDED, THE "EXPIRATION DATE"). HOLDERS OF NOTES MUST TENDER THEIR NOTES
AND CONSENT TO THE PROPOSED AMENDMENTS (AND NOT HAVE WITHDRAWN SUCH NOTES OR
REVOKED SUCH CONSENT) ON OR PRIOR TO THE EXPIRATION DATE TO RECEIVE THE
TENDER OFFER AND CONSENT CONSIDERATION.
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Shoney's, Inc., a Tennessee corporation (the "Company"), upon the terms
and subject to the conditions set forth in this Purchase Offer and Consent
Solicitation Statement (as it may be amended or supplemented, the
"Statement") and the accompanying Letters of Transmittal and Consent (each, a
"Letter of Transmittal and Consent") (the Statement and each Letter of
Transmittal and Consent being sometimes referred to herein as an "Offer"),
hereby offers to purchase for cash any and all of the following debt
securities (collectively, the "Notes"): the 8-1/4% Convertible Subordinated
Debentures Due 2002 originally issued by TPI Enterprises, Inc. ("TPI") and
subsequently assumed by the Company (the "TPI Debentures") at a price of
$691.59 per $1,000 principal amount of any TPI Debenture purchased (the
"Debenture Purchase Price"), and the Liquid Yield Option Notes Due 2004
(Zero Coupon - Subordinated) issued by the Company (the "LYONs") at a price
of $250.00 per $1,000 principal amount at maturity of any LYON purchased (the
"LYONs Purchase Price"). Each of the Offers is sometimes referred to as a
"Tender Offer" and collectively, as the "Tender Offers". The Debenture
Purchase Price and the LYONs Purchase Price each may be referred to
individually or collectively as the "Tender Offer and Consent Consideration."
In addition to the Tender Offer and Consent Consideration, the Company will
pay any and all accrued and unpaid interest on the TPI Debentures to but
excluding the settlement date of the Tender Offers.
The Notes are convertible into the Company's $1.00 par value common
stock (the "Shares"). The LYONs are convertible at a rate of 29.349 Shares
per $1,000 principal amount at maturity. The TPI Debentures are convertible
into 50.508 Shares per $1,000 principal amount. The Shares presently are
traded on the OTC Bulletin Board ("OTCBB") under the symbol "SHOY". On July
14, 2000, the last reported sales price of the Shares on the OTCBB was $1.06.
As of July 14, 2000, there were outstanding $177,358,000 in principal amount
at maturity of LYONs (with an aggregate accreted value as of that date of
$129,904,405) and $51,563,000 in principal amount of TPI Debentures. SEE
"SPECIAL FACTORS" AND "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" FOR CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY HOLDERS IN EVALUATING THE TENDER OFFERS
AND SOLICITATION.
In conjunction with the Tender Offers, the Company hereby solicits
(the "Solicitation") consents ("Consents") of registered holders of the Notes
("Holders") to certain proposed amendments to the indentures pursuant to
which the Notes were issued. If the requisite number of Consents are
received, the proposed amendments will be effective as to all Notes,
including those that are not purchased in the Tender Offers. Any Holder who
tenders Notes in the Tender Offers will be deemed to automatically have given
a corresponding Consent, and Notes may not be tendered without giving a
Consent. The consideration to be paid by the Company for the Consents is
reflected in the Tender Offer and Consent Consideration. The Company has
received written agreements from Holders of 70% of the LYONs and 73% of the
TPI Debentures to tender their Notes in the Offer.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE TRANSACTIONS,
PASSED UPON THE MERITS OR FAIRNESS OF THESE TRANSACTIONS OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS STATEMENT. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
_______________________
The Dealer Manager for the Tender Offers is:
BANC OF AMERICA SECURITIES LLC
July 18, 2000
This document was first sent or delivered to Holders on July 18, 2000.
IMPORTANT INFORMATION
Any Holder desiring to tender Notes and Consent to the Proposed
Amendments (as defined herein) should either (a) in the case of a Holder who
holds physical certificates evidencing such Notes, complete and sign the
applicable Letter of Transmittal and Consent (or facsimile thereof) in
accordance with the instructions therein (including any applicable signature
guarantee requirements) and send or deliver the manually signed Letter of
Transmittal and Consent (or facsimile thereof), together with certificates
evidencing such Notes and any other required documents, to The Bank of New
York, as Depositary (the "Depositary"), (b) in the case of a Holder who holds
Notes in book-entry form, request such Holder's broker, dealer, commercial
bank, trust company or other nominee to effect such transactions for such
Holder, or (c) tender Notes and deliver Consents through The Depository Trust
Company pursuant to its Automated Tender Offer Program. A beneficial owner
who has Notes registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact that broker, dealer, commercial
bank, trust company or other nominee if the beneficial owner desires to
tender the Notes so registered and Consent to the Proposed Amendments. See
"The Tender Offers and Consent Solicitations-Procedures for Tendering Notes
and Delivering Consents".
_____________________
HOLDERS OF LYONs SHOULD USE THE BLUE LETTER OF TRANSMITTAL AND
CONSENT IN ORDER TO BOTH TENDER THEIR LYONS AND CONSENT TO THE
PROPOSED AMENDMENTS TO THE LYONs INDENTURE (AS DEFINED HEREIN).
HOLDERS OF TPI DEBENTURES SHOULD USE THE YELLOW LETTER OF
TRANSMITTAL AND CONSENT IN ORDER TO BOTH TENDER THEIR TPI DEBENTURES
AND CONSENT TO THE PROPOSED AMENDMENTS TO THE TPI INDENTURE (AS
DEFINED HEREIN).
_____________________
FORWARD LOOKING STATEMENTS
Certain statements contained in, or incorporated by reference into,
this Statement may be considered forward looking statements. These forward
looking statements are based largely on the expectations of the Company and
are subject to a number of risks and uncertainties, many of which are beyond
the control of the Company. Actual results could differ materially from
these forward looking statements as a result of certain factors, including
but not limited to those described in the Annual Report on Form-10-K of the
Company for the year ended October 31, 1999, which is incorporated herein by
reference.
_____________________
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE OFFER AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS STATEMENT AND ANY RELATED DOCUMENTS DO NOT CONSTITUTE
AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL NOTES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. IN THOSE
JURISDICTIONS WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE OFFER
TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE
MADE ON BEHALF OF THE COMPANY BY THE DEALER MANAGER OR ONE OR MORE REGISTERED
BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
SUMMARY TERM SHEET
The following summarizes in a question and answer format the material
terms of the tender offers and the consent solicitations. You should
carefully read this entire document, as well as all appendices and related
documents, however, for more detailed information and instructions.
* WHAT NOTES ARE THE SUBJECT OF THE TENDER OFFERS AND CONSENT
SOLICITATIONS? (COVER PAGE, PAGE 17)
The notes that are the subject of the tender offers and consent
solicitations are the Liquid Yield Option Notes Due 2004 (Zero Coupon -
Subordinated) issued by Shoney's, Inc. and the 8-1/4% Convertible
Subordinated Debentures Due 2002, originally issued by TPI Enterprises, Inc.
and assumed by Shoney's, Inc. in 1996. As of July 14, 2000, there was
outstanding $177,358,000 in aggregate principal amount at maturity of the
LYONs and $51,563,000 in aggregate principal amount of the TPI debentures.
* WHO IS OFFERING TO BUY THE NOTES AND SOLICITING THE CONSENTS? (COVER
PAGE, PAGE 17)
Shoney's, the company that issued or, in the case of the TPI
debentures, assumed the notes, is offering to purchase for cash all of the
outstanding notes. In connection with those tender offers, Shoney's also is
requesting consents to amend the indentures under which the notes were
issued.
* WHY IS SHONEY'S OFFERING TO PURCHASE THE NOTES AND SOLICITING THE
CONSENTS? (PAGES 6, 17)
We intend to restructure our operations and refinance substantially
all of our existing senior indebtedness. A major element of this
restructuring plan is the separation of our "Shoney's" and "Captain D's"
restaurant operations, which are to be separately financed with their own new
senior indebtedness. The purpose of the tender offers and consent
solicitations is to acquire all of the outstanding notes in connection with
that refinancing and to obtain greater financial and operational flexibility.
We intend to effect the restructuring and debt refinancing regardless of the
outcome of the tender offers and consent solicitations.
* HOW MUCH IS SHONEY'S OFFERING TO PAY FOR THE NOTES? (COVER PAGE,
PAGE 17)
We are offering to pay $250.00 per $1,000 principal amount at
maturity of any LYON purchased and $691.59 per $1,000 principal amount of any
TPI debenture purchased. These purchase prices include the payment to holders
for their consent to the adoption of the proposed amendments to the
indentures under which the notes were issued. We also will pay to the
holders of the TPI debentures any and all accrued and unpaid interest on the
TPI debentures to but excluding the settlement date of the tender offers.
i
* WHAT IS THE MARKET VALUE OF THE NOTES? (PAGE 27)
During the quarter ended May 14, 2000, the LYONs traded at values
between $110.00 and $205.00 per $1,000 principal amount at maturity. The
last reported trade of the LYONs on July 11, 2000, the last day on which the
LYONs traded on the NYSE, was at $232.50 per $1,000 principal amount at
maturity. There is no established reporting or trading system for the TPI
debentures and we are unable to determine the trading history of the TPI
debentures. We believe that the trading in both the LYONs and the TPI
debentures has been limited and sporadic.
* WHEN AND HOW WILL PAYMENT BE MADE? (COVER PAGE, PAGE 20)
Notes purchased will be paid for in same-day funds on the second
business day after the date on which the tender offers end, or as soon as
practicable after the tender offers end. Assuming the tender offers are not
extended, the payment date is expected to be August 16, 2000.
* DOES SHONEY'S HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT? (PAGE 8)
We have been engaged in discussions with Banc of America Securities
LLC with respect to senior secured financing of approximately $255 million.
We have accepted a commitment for financing of $99 million and anticipate
receiving commitments for the remaining financing and closing on that
financing on or prior to the expiration of the tender offers. Although we
believe this financing will be available to us, we cannot assure you of that
or what the terms of the financing might be.
* HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFERS? (COVER
PAGE, PAGE 18)
You must tender your notes no later than 11:59 p.m., New York City
time, on August 14, 2000, or on a later date if we extend the tender offers.
* IF I TENDER MY NOTES, WILL I BE PAID MY ACCRUED INTEREST? (COVER
PAGE, PAGE 17)
Yes, if you are a TPI debenture holder. TPI debenture holders will
be paid any and all accrued and unpaid interest on the TPI debentures to but
excluding the settlement date of the tender offers.
* CAN I TENDER MY NOTES WITHOUT CONSENTING TO THE PROPOSED AMENDMENTS
TO THE INDENTURES? (PAGE 18)
No. If you tender your notes in the offer, you will be considered
to have delivered a corresponding consent.
ii
* CAN I CONSENT TO THE PROPOSED AMENDMENTS TO THE INDENTURES WITHOUT
TENDERING MY NOTES? (PAGE 18)
No. You may not deliver a consent without also tendering your notes
in the offer.
* WHAT ARE THE SIGNIFICANT CONDITIONS TO THE OFFERS? (PAGE 18)
The tender offers are conditioned on, among other things:
* at least 90% of the aggregate principal amount at maturity
of LYONs and at least 90% of the aggregate principal amount
of TPI debentures being validly tendered and thereby
consented to the proposed amendments to the indentures and
not withdrawn (as of July 14, we had agreements from 73%
of the holders of the TPI debentures and 70% of the holders
of the LYONs to tender their notes); and
* our receipt of suitable financing for the tender offers and
the refinancing of substantially all of our other existing
indebtedness.
We may waive, in our discretion, the conditions to financing.
Because the indentures require the consent of only a majority in principal
amount of the notes in order for the proposed amendments to become effective,
it is possible, if we waive the condition regarding the minimum percentage of
consents, that the proposed amendments will become effective even if less
than 90% (but more than 50%) of the aggregate principal amount of notes are
tendered and corresponding consents given in the offers.
* CAN THE OFFERS BE EXTENDED, AND UNDER WHAT CIRCUMSTANCES? (PAGE 21)
Yes. We have the right to extend the offers at any time by giving
written notice to The Bank of New York, the Depositary.
* HOW WILL I BE NOTIFIED IF THE OFFERS ARE EXTENDED? (PAGE 21)
If we extend the offers, we will publicly announce the extension no
later than 9:00 a.m., New York City time, on the first business day after the
previously scheduled offer expiration time.
* HOW DO I TENDER MY NOTES AND DELIVER MY CONSENT? (PAGE 21)
There are three ways for you to tender your notes and deliver your
consent:
* send or deliver to The Bank of New York the certificates for
your notes, the completed and signed BLUE Letter of
Transmittal and Consent for LYONs or YELLOW Letter of
Transmittal and Consent for TPI debentures, both of which
are included with this document, and any other required
documents;
iii
* for notes held in "street" name, tender your notes and
deliver consents by requesting your broker, dealer,
commercial bank, trust company or other nominee to effect
the transaction. This is the only method which may be used
to tender notes and deliver consents with respect to notes
held in "street" name; or
* tender your notes and deliver consents through The
Depository Trust Company pursuant to its Automated Tender
Offer Program.
* DO I HAVE TO PAY A COMMISSION IF I TENDER MY NOTES? (PAGE 17)
No. No commissions are payable by holders to Banc of America
Securities LLC, the dealer manager, D. F. King & Co., Inc., the information
agent, or The Bank of New York, the depositary.
* HOW DO I WITHDRAW TENDERED NOTES? (PAGE 20)
You may withdraw any notes that you tender at any time before the
tender offer ends, as well as at any time after 40 business days after the
date of this document unless we already have accepted the notes. To
do so, you must provide The Bank of New York a proper written or facsimile
notice of withdrawal. You may not rescind a withdrawal of tendered notes.
However, you may retender your notes by following the proper tender
procedures.
* HOW DO I REVOKE MY CONSENT TO THE PROPOSED AMENDMENTS TO THE
INDENTURES? (PAGE 21)
You may revoke your consent at any time before the tender offer ends
by properly withdrawing your tendered notes. You may not revoke your consent
after the tender offer ends or without withdrawing your tendered notes. You
may not rescind a revocation of a consent.
* WHAT WILL HAPPEN TO NOTES NOT TENDERED IN THE OFFER? (PAGES 3, 28)
Notes not tendered in the offer will remain outstanding. If the
proposed amendments to the indentures are approved and implemented,
substantially all restrictive covenants and certain other provisions of the
indentures will be deleted or amended with respect to any notes that remain
outstanding. In addition, the trading market for any notes not tendered may
be significantly more limited.
* WHAT ARE THE PROPOSED AMENDMENTS TO THE INDENTURES? (PAGES 28, A-1
AND B-1)
The proposed amendments would delete most of the restrictive
covenants currently contained in the indentures, such as requirements to
maintain properties and pay certain taxes and limitations on our ability to
make certain restricted payments and undertake certain investments,
consolidations, mergers and sales and leases of all or substantially all of
our properties and assets.
iv
* CAN I STILL CONVERT MY NOTES INTO SHONEY'S STOCK? (PAGES 25, 26)
Yes. If, however, you tender your notes in the offers, you may only
convert your notes if you withdraw your notes prior to the time on which your
right to withdraw has expired. LYONs are convertible into Shoney's stock at
the rate of 29.349 shares per $1,000 in principal amount at maturity. The
TPI debentures are convertible into Shoney's stock at the rate of 50.508
shares per $1,000 in principal amount. Shoney's stock currently is traded on
the OTC Bulletin Board under the symbol "SHOY". As of July 14, 2000, the last
reported sales price of the stock on the OTC Bulletin Board was $1.06.
Based on that price, each $1,000 of principal amount at maturity of LYONs
would convert into Shoney's stock with a market value of $31.11 and each
$1,000 of principal amount of TPI debentures would convert into Shoney's
stock with a market value of $53.54.
* WHAT ARE THE MATERIAL FEDERAL INCOME TAX CONSEQUENCES IF I TENDER MY
NOTES? (PAGE 29)
Sales of notes pursuant to the offers generally will be taxable for
United States federal income tax purposes. A holder selling notes in the
offer generally will recognize capital gain or loss equal to the difference
between the amount of cash received, other than amounts received attributable
to accrued interest, which will be taxed as accrued interest, and the
holder's adjusted tax basis in the notes sold at the time of sale. The
adjusted tax basis generally will equal the cost of the notes to the holder,
plus the amount of any original issue discount and market discount previously
taken into income by the holder, less the amount of any amortizable bond
premium previously amortized by the holder with respect to the notes.
If, however, the holder purchased notes at a market discount, the tax
treatment will be different than that just described. Subject to a statutory
de minimis exception, notes have market discount if they were purchased at an
amount less than the adjusted issue price or less than the stated redemption
price at maturity. In general, unless the holder has elected to include
market discount in income currently as it accrues, any gain realized by a
holder on the sale of notes having market discount in excess of a de minimis
amount will be treated as ordinary income to the extent of the gain
recognized or the portion of the market discount that has accrued while the
notes were held by the holder, whichever is less.
The proposed amendments should not constitute a "significant
modification" of the notes under applicable Treasury regulations. This means
that a holder who does not tender notes in the offer will not recognize any
gain or loss for U.S. federal income tax purposes upon the adoption of the
proposed amendments to the Indentures. In addition, the holder will have the
same adjusted tax basis and holding period in the notes after the adoption of
the proposed amendments that the holder had in the notes immediately before
the adoption. If alternatively the proposed amendments are treated as a
"significant modification" of the notes, the adoption of the proposed
amendments would result in a "deemed exchange". This means that the notes
would be considered to have been exchanged for different notes. In such
case, it is possible that a non-tendering U.S. holder would recognize gain or
loss on the deemed exchange. See "Certain U.S. Federal Income Tax
Consequences".
v
* WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER? (PAGE 31)
You may contact D. F. King & Co., Inc., the information agent, at
(888) 242-8157 if you have any questions or requests for assistance or for
additional copies of this document, the Letters of Transmittal and Consent or
related documents. You also may contact Banc of America Securities LLC, the
dealer manager, at (704) 388-4813 (collect) or (888) 292-0070 (toll free) or
your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the terms of the offer and the solicitation of consents
to the proposed amendments to the indentures. The addresses of these
representatives can be found on the back cover of this document.
* IS SHONEY'S MAKING ANY RECOMMENDATION ABOUT THE OFFER? (PAGE 5)
No. We express no opinion and remain neutral with respect to whether
holders should tender notes in response to the tender offers and consent
solicitations. Holders should determine whether or not to accept the tender
offers and consent solicitations based upon their own assessment of current
market value, liquidity needs and investment objectives.
vi
TABLE OF CONTENTS
SUMMARY TERM SHEET........................................................i
AVAILABLE INFORMATION.....................................................1
INCORPORATION OF INFORMATION BY REFERENCE.................................2
SPECIAL FACTORS...........................................................3
Adverse Effect of Proposed Amendments on Holders Who Do Not Tender......3
Agreements with Noteholders.............................................3
Proposed Restructuring and Refinancing..................................4
Reduced Liquidity of the Notes..........................................4
Operating History; Repayment of Notes Uncertain.........................4
Certain Bankruptcy Considerations.......................................5
Fairness................................................................5
THE COMPANY...............................................................6
General.................................................................6
Planned Reorganization..................................................6
Source and Amount of Funds..............................................8
FINANCIAL INFORMATION.....................................................10
Unaudited Pro Forma Consolidated Condensed Financial Statements.........11
Financial Ratios........................................................16
THE TENDER OFFERS AND CONSENT SOLICITATIONS...............................17
Purpose.................................................................17
Terms...................................................................17
Conditions..............................................................18
Acceptance for Payment and Payment for the Notes........................20
Withdrawal and Revocation Rights........................................20
Extension, Amendment and Termination of Tender Offers...................21
Procedures for Tendering Notes and Delivering Consents..................21
Need for Guarantee of Signature.........................................23
Book-Entry Delivery of the Notes........................................23
Guaranteed Delivery.....................................................23
Absence of Appraisal Rights.............................................24
DESCRIPTION OF THE NOTES..................................................25
Liquid Yield Option Notes Due 2004......................................25
8-1/4% Convertible Subordinated Debentures Due 2002.....................26
Market and Trading Information..........................................27
PROPOSED AMENDMENTS TO THE INDENTURES.....................................28
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES..............................29
DEALER MANAGER, DEPOSITARY AND INFORMATION AGENT..........................31
MISCELLANEOUS.............................................................32
ANNEX A...................................................................A-1
ANNEX B...................................................................B-1
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, files reports, proxy statements and other documents and
information with the Securities and Exchange Commission (the "Commission").
The Company also has filed with the Commission an Issuer Tender Offer
Statement on Schedule TO (the "Tender Offer Statement") under the Exchange
Act, which includes certain of the information contained in this Statement
and certain other information relating to the Tender Offers. Such reports,
proxy statements and other documents and information may be inspected and
copied at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Commission located at 7 World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, Suite 1400,
500 West Madison Street, Chicago, Illinois 60661. Copies of such material can
be obtained from the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a Web Site located at http://www.sec.gov that
contains reports, proxy and the aforementioned statements and other
information regarding registrants that have filed electronically with the
Commission, including the Company. The Company's Shares and LYONs currently
are listed on the New York Stock Exchange (although the NYSE has indicated
its intention to apply to the Commisssion for delisting of such Shares and
LYONs and trading thereof has been suspended) and such reports, proxy
statements and other documents and information concerning the Company are
also available for inspection at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005.
Copies of the Indentures (as defined) pursuant to which the LYONs and
the TPI Debentures were issued also are available from the Company upon
request. Requests for such copies should be directed to the Information Agent
or the Dealer Manager at the addresses and telephone numbers set forth
herein.
1
INCORPORATION OF INFORMATION BY REFERENCE
The following documents of the Company have been filed with the
Commission and are incorporated herein by reference:
(i) the Company's Tender Offer Statement on Schedule TO filed
with the Commission on July 18, 2000;
(ii) the Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1999 filed with the Commission on January
31, 2000;
(iii) the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended February 20, 2000 filed with the Commission on
March 22, 2000;
(iv) the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended May 24, 2000 filed with the Commission on June
28, 2000; and
(v) the Company's Current Report on Form 8-K, dated May 5, 2000.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date hereof and prior to the
Expiration Date shall be deemed to be incorporated by reference into this
Statement and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Statement to the extent that a statement contained
herein or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Statement. The Company
will provide without charge to each person, including any beneficial owner to
whom this Statement has been delivered, upon written or oral request of such
person, a copy of any and all of the documents referred to above that have
been or may be incorporated by reference herein other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference
herein). Requests for such copies should be directed to Richard D.
Schafstall, Senior Vice President, General Counsel and Secretary, Shoney's,
Inc., 1727 Elm Hill Pike, Nashville, Tennessee 37210; (615) 231-2253.
2
SPECIAL FACTORS
In deciding whether to participate in the Tender Offers and
Solicitation, each Holder should consider carefully, in addition to the other
information contained or incorporated by reference herein, the information
appearing in the Company's Annual Report on Form 10-K for the year ended
October 31, 1999 and in the Quarterly Reports on Form 10-Q for the quarters
ended February 20, 2000 and May 14, 2000, under the caption "Risk Factors" in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which information is incorporated into this Statement by
reference. Each Holder also should consider the following factors when
making a decision about whether or not to tender Notes pursuant to the Tender
Offers.
ADVERSE EFFECT OF PROPOSED AMENDMENTS ON HOLDERS WHO DO NOT TENDER.
Notes not repurchased pursuant to the Tender Offers will remain outstanding.
If the Proposed Amendments become operative, certain of the principal
restrictive covenants contained in the Indentures will be amended or
eliminated. The Indentures, as so amended, will continue to govern the terms
of the Notes that remain outstanding under each Indenture after consummation
of the Tender Offers. The elimination (or, in certain cases, the amendment)
of those restrictive covenants and other provisions would permit the Company,
insofar as the Indentures are concerned, to, among other things, incur
indebtedness, pay dividends or make other restricted payments, incur liens or
make investments that otherwise would not have been permitted under the
Indentures. It is possible that any such actions that the Company would be
permitted to take as a result of the Proposed Amendments effected by the
Supplemental Indentures will adversely affect the interests of non-tendering
Holders. See "-Agreements with Noteholders" and "Proposed Amendments to the
Indentures".
AGREEMENTS WITH NOTEHOLDERS. On March 27, 2000, the Company commenced an
unsuccessful tender offer to acquire all of the Notes for an aggregate price
of approximately $42 million. Subsequent to the expiration of that previous
offer, the Company continued a dialogue with a committee of Holders and their
counsel. Those discussions resulted in letter agreements (the "Letter
Agreements"), by and between the Company and Holders representing 70% of the
outstanding LYONs and 73% of the outstanding TPI Debentures,pursuant to
which: (a) each of the Holders have agreed to irrevocably and unconditionally
deposit his, her or its respective Notes and to give Consents to the Proposed
Amendments to the Indentures pursuant to the Tender Offers; and (b) each of
the Holders have granted to the Company an option (collectively, the
"Options") to purchase his, her or its respective Notes at a price equal to
$250.00 per $1,000 of principal amount at maturity of any LYON purchased and
$691.59 per $1,000 of principal amount of any TPI Debenture purchased. The
Options become exercisable only if the Tender Offers expire or are
terminated without the Company accepting and paying for any Notes tendered
pursuant to the Tender Offers. The Options become exercisable two business
days after the Tender Offers expire without being extended by the Company
and remain exercisable through September 3, 2000. The aggregate principal
amount at maturity of LYONs and the aggregate principal amount of TPI
Debentures that the Company has the right to acquire pursuant to the Options
are, respectively, $123,547,000, or 70% of the aggregate principal amount at
maturity of outstanding LYONs, and $37,434,000, or 73% of the aggregate
principal amount of outstanding TPI Debentures.
3
Each of the Letter Agreements is dated June 27, 2000, except for one
Letter Agreement which is dated July 7, 2000. The Holders who entered into
the Letter Agreements include CIBC World Markets, OTA L.P., Courage Special
Situations Fund, L.P., V-One Opportunity Fund, L.P., Special Value Bond Fund,
Credit Research & Trading LLC, Lonestar Partners, L.P., Westgate
International, L.P., The Liverpool Limited Partnership, Evangelical Lutheran
Church Board of Pensions, One Group High Yield Bond Fund, Pacholder High
Yield Fund, Inc., Pacholder Value Opportunity Fund, L.P., Tom Lunn and
Camden Asset Management.
PROPOSED RESTRUCTURING AND REFINANCING. The Company intends to
restructure its operations and refinance substantially all of its existing
senior indebtedness (the "Reorganization"). A major element of the
Reorganization is the separation of the Company's "Shoney's" and "Captain
D's" restaurant operations. Each of these operations would then be
separately financed with new indebtedness, all of which would be senior to
the Notes and secured by all of such operation's assets. The Reorganization
also may restrict the ability of such operations to make cash payments to the
Company. See "-- Operating History; Repayment of Notes Uncertain" and "The
Company-Planned Reorganization". The new indebtedness would be used for
general corporate purposes, including working capital and capital
expenditures.
REDUCED LIQUIDITY OF THE NOTES. The LYONs currently are listed on the
New York Stock Exchange (although the NYSE has suspended the LYONs from
trading on the NYSE and has indicated its intention to apply to the
Commission to delist the LYONs) and trade over-the-counter. The TPI
Debentures currently are traded over-the-counter. Trading in both has been
limited. There can be no assurance that any trading market will exist for
either the LYONs or the TPI Debentures following consummation of the Tender
Offers. The extent of the public market for the Notes following a
consummation of the Tender Offers would depend on the number of Holders that
remain at such time, the interest in maintaining markets in the Notes on the
part of securities firms and other factors. An issue of security with a
smaller float may trade at lower prices than would a comparable issue of
securities with a greater float. Accordingly, the market price for Notes
that are not tendered in the Tender Offers may be adversely affected to the
extent that the amount of Notes purchased pursuant to the Tender Offers
reduces the float. The reduced float also may have the effect of causing
the trading prices of the Notes that are not tendered or purchased to be more
volatile.
OPERATING HISTORY; REPAYMENT OF NOTES UNCERTAIN. The Company has
experienced significant losses in recent years and, as of May 14, 2000, had
an accumulated deficit of approximately $144.6 million. Accordingly, there
can be no assurance that the Company will achieve profitability at a level
sufficient to assure repayment of the Notes that remain outstanding following
the Tender Offers. In addition, upon the effectiveness of the Proposed
Amendments, certain covenants will be eliminated which may adversely affect
the market price for the Notes. In addition, the Indentures pursuant to
which the Notes are issued impose no restrictions on the ability of the
Company or its subsidiaries to incur senior indebtedness which would be
expressly or effectively senior to the Notes. The existence of current or
future indebtedness of the Company or its subsidiaries may make repayment of
the Notes upon maturity less probable. As described above, we intend to
restructure our operations, including issuing new indebtedness at the
subsidiary level and refinancing the Company's senior indebtedness. In
addition, substantially all of the assets of the Company currently are
pledged or mortgaged to secure indebtedness of the
4
Company and its subsidiaries and may be pledged or mortgaged to secure future
indebtedness of the Company and its subsidiaries. All such secured
indebtedness is effectively senior to the Notes. Accordingly, there is no
direct access to assets of the Company or its subsidiaries in the event of a
non-payment of the Notes and there can be no assurance that the Company will
have sufficient cash on hand or available from the liquidation of other
assets, or that other sources of funding will be available, to pay interest
on the TPI Debentures prior to maturity, or principal on either the TPI
Debentures or the LYONs at maturity.
CERTAIN BANKRUPTCY CONSIDERATIONS. Any payments made to Holders in
consideration for their Notes also may be subject to challenge as a
preference if such payments: (a) are made within ninety (90) days of a
bankruptcy filing by the Company (or within one (1) year in the case of
Holders who are determined to be insiders of the Company); (b) are made when
the Company is insolvent; and (c) permit the Holders to receive more than
they otherwise might receive in a liquidation under applicable bankruptcy
laws. If such payments were deemed to be a preference, the full amount of
such payments could be recovered by the Company as a debtor in possession or
by the Company's trustee in bankruptcy, and the Holder would be entitled to
assert claims in respect of the Notes against the Company in its
reorganization or bankruptcy case. The Company does not believe that it is
currently insolvent, will be insolvent after giving effect to the Tender
Offers or will be insolvent within one (1) year, although for purposes of the
preference laws described above, the Company would be presumed insolvent for
the ninety (90) days preceding a bankruptcy or reorganization case.
FAIRNESS. The Tender Offers have been unanimously approved by the
Company's Board of Directors. A condition of the Tender Offers is that
Holders of at least 90% of the outstanding TPI Debentures and at least 90%
of the outstanding LYONs tender their Notes and consent to the Proposed
Amendments. The Company has not retained and does not intend to retain any
unaffiliated representative to act solely on behalf of the unaffiliated
Holders for purposes of negotiating the terms of the Tender Offers and/or
preparing a report concerning the fairness of the Tender Offers. The
Company has retained counsel, at a cost not to exceed $25,000, to review the
Indentures and provide advice to Holders regarding provisions thereof. The
Company also has paid to such counsel $125,000 in connection with the
negotiation of the Letter Agreements with certain Holders. These Letter
Agreements are described in "-Agreements with Noteholders". The Company has
not received any report, opinion or appraisal from an outside party that is
materially related to the Tender Offers.
The Company determined that this was an appropriate time to offer to
purchase the Notes in view of the proposed restructuring of the Company's
operations and the incurrence of significant new senior indebtedness. The
Company reasonably believes the terms of the Tender Offers are fair to
unaffiliated Holders. The Company, however, is not making a recommendation
whether Holders should tender Notes. Holders should determine whether to
accept the Tender Offers based upon their own assessment of current market
value, liquidity needs and investment objectives. The Tender Offer and
Consent Consideration may be in excess of recent prevailing market prices.
In making the Tender Offers, the factors considered by the Company's Board of
Directors were the additional indebtedness that is proposed to be incurred
that would be senior to the Notes, the opportunity to retire indebtedness at
a discount and increase the operational and
5
financial flexibility of the Company, the operating history of the Company
and the recent prevailing market prices of the Notes. One of the reasons the
Company's Board of Directors determined that the Tender Offers are fair to
Holders is that the Tender Offers provide the opportunity to Holders to sell
their Notes for a higher price than may have been available on the open
market immediately prior to the announcement of the Tender Offers and without
the usual transaction costs associated with market sales. In addition, the
Board considered the fact that, in light of the Company's significant losses
in recent years, the Holders can have no assurance that the Company will
achieve profitability at a level sufficient to assure repayment of the Notes
when they become due. Finally, the Board considered the fact that the Notes
would be subordinate to the approximately $255 million in new indebtedness,
and that Holders would not have direct access to the assets of the Company's
subsidiaries. See "-Proposed Restructuring and Refinancing" and "-Operating
History; Repayment of Notes Uncertain."
THE COMPANY
GENERAL. As of May 14, 2000, Shoney's, Inc. operated and franchised a
chain of 1,084 restaurants in 28 states, including 617 company-owned and
467 franchised restaurants. The diversified food service chain consists of
two restaurant divisions: Shoney's Restaurants and Captain D's. Shoney's
Restaurants are family dining restaurants offering full table service and a
broad menu, and Captain D's are quick-service restaurants specializing in
seafood. The Company also owns Commissary Operations, Inc. ("COI") which
operates three distribution centers that support the Company's operations
and those of its franchised restaurants. COI also includes a food
processing facility for ground beef, steaks, and soup products. The Company's
fiscal year ends on the last Sunday in October. Fiscal year 1999 included 53
weeks compared to 52 weeks for fiscal 1998 and 1997. The address and
telephone number of the Company's principal executive offices are
1727 Elm Hill Pike, Nashville, Tennessee 37210, (615) 391-5201.
PLANNED REORGANIZATION. Given the recent operating history of the
Company's restaurants, the Company intends to restructure its operations and
refinance substantially all of its senior indebtedness. A major element of
this restructuring plan is the separation of the Company's "Shoney's" and
"Captain D's" restaurant operations. Each of these operations then would be
separately financed with new senior secured indebtedness. The Tender Offers
and the retirement of the Notes pursuant to the Tender Offers are part of the
Reorganization. However, the Company intends to undertake the Reorganization,
as described below, whether or not the Tender Offers and Consent
Solicitations are consummated.
The following sets forth the existing corporate and operating structure
of the Company, including a description of owned and leased "Shoney's" and
"Captain D's" restaurants:
6
[Download Table]
[---------------------------------------------]
[ SHONEY'S, INC. ]
-------[ (28 owned Shoney's; 52 leased Shoney's) ]------
| [(16 owned Captain D's; 86 leased Captain D's)] |
| ----------------------------------------------- |
| | |
| | |
-------------------------- ------------------------ ----------------------
[ TPI RESTAURANTS, INC. ] [ ] [ ]
[ ] [ SHN INVESTMENTS, LLC ] [ COMMISSARY ]
[ (31 leased Shoney's) ] [ ] [ OPERATIONS, INC. ]
[(30 leased Captain D's) ] [ ] [ ]
------------------------- ------------------------ ----------------------
| |
| |
-------------------------- -------------------------
[ TPI PROPERTIES, INC. ] [ SHN PROPERTIES, LLC ]
[ ] [ ]
[ (18 owned Shoney's) ] [ (126 owned Shoney's) ]
[ (25 owned Captain D's) ] [(205 owned Captain D's)]
-------------------------- ------------------------
To accommodate the new financing, the Company, as a part of the
Reorganization, intends to:
* Undertake reorganizations at the subsidiary level that will
result in six newly-formed limited liability company
subsidiaries (to be named "Shoney's Properties Group 1,
LLC", "Shoney's Properties Group 2, LLC", "Shoney's
Properties Group 3, LLC", "Shoney's Properties Group 4,
LLC", "Shoney's Properties Group 5, LLC" and "Shoney's
Properties Group 6, LLC (collectively, the "Shoney's
Properties Groups")) owning an aggregate of 142 Shoney's
real estate properties and SHN Properties LLC (which will be
renamed "Captain D's Properties, LLC") owning 230 Captain's
D's real estate properties;
* Create a new Captain D's operating company by converting SHN
Investments, LLC into a corporation and renaming it "Captain
D's, Inc.";
* Transfer (by lease, license or otherwise) from Shoney's,
Inc. to Captain D's, Inc. 16 owned and 86 leased
Captain D's restaurants and all Captain D's equipment,
trademarks, franchises and other general intangibles
comprising the Company's "Captain D's" business;
* Transfer (by lease, license or otherwise) from TPI
Restaurants, Inc. to Captain D's, Inc. 31 leased Captain
D's restaurants and from TPI Properties, Inc. to Captain
D's, Inc. 25 owned Captain D's restaurants, and all Captain
D's equipment, trademarks, franchises and other general
intangibles comprising the "Captain D's" business; and
* Merge TPI Restaurants, Inc. into Shoney's, Inc.
7
After these steps and changing the names of certain of the subsidiary
corporations, the resulting corporate structure of the Company with respect
to the Company's owned and leased "Shoney's" and "Captain D's" restaurants
would be as follows:
[Download Table]
[--------------------------------------------]
[ SHONEY'S, INC. ]
-------[ (30 owned Shoney's; 82 leased Shoney's) ]-------
| ---------------------------------------------- |
| | |
| | |
| | |
-------------------------- -------------------------- ----------------------
[ SHONEY'S PROPERTIES ] [ CAPTAIN D'S, INC. ] [ ]
[ GROUPS ] [ ] [ COMMISSARY ]
[ (142 owned Shoney's) ] [ (16 owned Captain D's) ] [ OPERATIONS, INC. ]
[ ] [(117 leased Captain D's)] [ ]
------------------------- -------------------------- ----------------------
|
|
-------------------------
[ CAPTAIN D'S PROPERTIES,]
[ LLC ]
[(230 owned Captain D's) ]
[ ]
-------------------------
The Reorganization results in the Company's "Shoney's" operations being
within Shoney's, Inc., and the Shoney's Properties Groups and the Company's
"Captain D's" operations being within Captain D's, Inc. and Captain D's
Properties, LLC.
The Company intends to refinance its existing indebtedness and pay the
Tender Offer and Consent Consideration with new senior secured financing of
approximately $255 million. The Company expects that this financing would
restrict the ability of its subsidiaries to make payments to Shoney's, Inc.
other than for goods and services that are provided on an arms-length basis.
Accordingly, the creditors of Shoney's (which would include any Notes that
remain outstanding after the Tender Offers) would not have direct access to
the assets of its subsidiaries. In addition, any Notes that remain
outstanding following the Tender Offers will be subordinate to all of this
planned senior secured indebtedness.
SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by the
Company to pay the Tender Offer and Consent Consideration (assuming all Notes
are tendered) and refinance substantially all of its remaining indebtedness
is estimated to be approximately $255 million (the "New Financing"). The
Company has retained Banc of America Securities LLC to assist it with
restructuring its balance sheet and related indebtedness. We currently are
engaged in discussions with Banc of America Securities LLC with respect to
the proposed New Financing. We have accepted a commitment (the "Commitment")
for financing of $99 million (the "Loan Amount") that will relate to the
Shoney's Properties Groups. The terms of the Commitment are set forth in a
commitment letter (the "Commitment Letter"), dated June 29, 2000, by and
between the Company and FFCA Funding Corporation ("FFCA"). The Commitment
Letter specifies that interest on the Loan Amount will accrue at an annual
rate equal to the ten-year Unites States
8
Treasury Note rate in effect not earlier than ten days nor later than two
days prior to the date that FFCA initially anticipates the closing of the
Commitment to occur plus 4.50%. The Loan Amount will be secured by a first
lien mortgage or deed of trust on the land, building, other improvements and
related personal property at specified properties owned by the Shoney's
Properties Groups and the Company. The Commitment will expire after
September 30, 2000. We anticipate receiving commitments for the balance of
the New Financing and closing on the New Financing on or prior to the
Expiration Date.
No assurance, however, can be given that all of the New Financing will
be available or received by the Company upon satisfactory terms.
Consummation of the Tender Offers is contingent upon, among other things, the
Company receiving debt financing in an amount necessary to (a) pay the Tender
Offer and Consent Consideration; (b) refinance substantially all of the
remaining indebtedness of the Company; and (c) pay fees and expenses
associated with the foregoing, all on terms acceptable to the Company.
To the extent that the proceeds of the New Financing are not used to
retire the LYONs and TPI Debentures, the Company intends to use any such
remaining proceeds for general corporate purposes, including working capital
and capital expenditures.
9
FINANCIAL INFORMATION
Unaudited Pro Forma Consolidated Condensed Financial Statements
(in thousands except principal and accreted amounts)
The following unaudited pro forma consolidated condensed balance sheet
as of May 14, 2000 gives effect to new debt proceeds totaling $254.5 million
and the application of the estimated proceeds, net of finance charges and
expenses, to the purchase of all outstanding LYONs and TPI Debentures at
respective prices of $250 per $1,000 of principal amount at maturity and
$691.59 per $1,000 principal amount, and the repayment of existing bank debt
as described in Summary Term Sheet of this Statement, as if all such
transactions had been completed as of May 14, 2000.
The following unaudited pro forma consolidated condensed statement of
operations for the year ended October 31, 1999 gives effect to the following
transactions as if all such transactions had been completed as of October 26,
1998 and the following unaudited pro forma consolidated condensed statement
of operations for the twenty-eight week period ended May 14, 2000, gives
effect to the following transactions as if all such transactions had been
completed as of November 1, 1999:
* the receipt of new debt proceeds totaling $254.5 million and the
application of the estimated net proceeds thereof to the purchase of
LYONs and TPI Debentures and repayment of existing bank debt as
described in Summary Term Sheet of this Statement.
The pro forma consolidated condensed financial information presented
herein does not purport to represent what the Company's results of operations
or financial position would have been had such transactions in fact occurred
at the beginning of the periods presented or to project results of operations
in any future period. The unaudited pro forma consolidated condensed
financial statements should be read in conjunction with our Consolidated
Financial Statements and related Notes thereto incorporated by reference in
this Statement.
10
SHONEY'S, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
[Download Table]
Pro Forma
(in thousands) Historical Pro Forma Historical
5/14/00 Adjustments 5/14/00
----------- ----------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 6,699 $ 245,000 (a)
(246,210) (b) $ 5,489
Accounts and notes receivable, net 10,991 10,991
Inventories 40,144 40,144
Prepaid expenses 4,795 4,795
Net current assets of discontinued
operations 811 811
Net current assets held for sale 12,983 12,983
-------- --------- --------
Total current assets 76,423 (1,210) 75,213
Net Property Plant & Equipment 265,347 265,347
Other assets:
Goodwill, net 18,596 18,596
Deferred charges and other
intangible assets 4,971 9,500 (a)
(4,447) (b) 10,024
Net non-current assets of
discontinued operations 117 117
Other 4,072 4,072
-------- -------- --------
$ 369,526 $ 3,843 $ 373,369
======== ======== ========
LIABILITIES AND COMMON
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 27,632 $ 27,632
Other accrued liabilities 60,325 (1,252) (b)
4,000 (b) 63,073
Debt and capital leases due
within one year 26,836 (20,223) (b) 6,613
-------- -------- --------
Total current liabilities 114,793 (17,475) 97,318
Long-term senior debt and capital
lease obligations 161,705 254,500 (a)
(141,735) (b) 274,470
Zero coupon subordinated
convertible debentures 128,103 (128,103) (b) 0
Subordinated convertible debt 49,520 (49,520) (b) 0
Other liabilities 59,983 59,983
Shareholders' deficit:
Common stock 50,595 50,595
Additional paid-in capital 137,657 137,657
Accumulated deficit (332,830) 86,176 (b) (246,654)
-------- ------- ---------
Total shareholders' deficit (144,578) 86,176 (58,402)
-------- -------- --------
$ 369,526 $ 3,843 $ 373,369
======== ======== ========
See notes to unaudited pro forma consolidated condensed balance sheet.
11
SHONEY'S, INC.
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands, except principal and accreted amounts)
(a) Reflects $245,000 of new debt proceeds, net of debt issuance costs
of $9,500.
(b) Reflects the application of the new debt proceeds for the
acquisition of $128,103 accreted value of subordinated zero coupon
debentures, due 2004 for an aggregate price of $250 per $1,000 of
principal amount at maturity or $44,340 and the acquisition
of 51,563 units of $1,000 principal amount of TPI subordinated
convertible debentures, due 2002 for an aggregate price of $691.59
per unit or $35,560, the payment of expenses of $3,000, the
application of the new debt proceeds to repay outstanding
balances under the existing bank debt facility of $161,958 plus
accrued interest of $1,282 and the write off of unamortized debt
issue costs of $4,447. Also reflects extraordinary gain in
shareholders' deficit resulting from the transactions adjusted for
income tax provision of $4,000 related to the extraordinary gain.
12
SHONEY'S, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1999
(In thousands, except per share data)
[Download Table]
Pro Forma
Historical Pro Forma Historical
10/31/99 Adjustments 10/31/99
---------------------------------------------
Total Revenues $ 999,373 $ 999,373
Costs and Expenses
Cost of sales 872,376 872,376
General and administrative expenses 77,389 77,389
Impairment of long-lived assets 18,424 18,424
Interest expense 42,159 $ (10,812) (a) 31,347
Restructuring expenses 4,486 4,486
Litigation settlement 14,500 14,500
--------- ---------- ---------
Total costs and expenses 1,029,334 (10,812) 1,018,522
Loss before income taxes (29,961) 10,812 (19,149)
Benefit from income taxes (1,135) 0 (b) (1,135)
----------- ---------- ----------
Net loss $ (28,826) $ 10,812 $ (18,014)
=========== ========== ==========
Earnings per common share
Basic:
Net loss $ (0.58) $ 0.21 $ (0.37)
=========== ========== ==========
Diluted:
Net loss $ (0.58) $ 0.21 $ (0.37)
=========== ========== ==========
Weighted average shares outstanding
Basic 49,339,259 49,339,259
Diluted 49,339,259 49,339,259
See notes to unaudited pro forma consolidated condensed statements of
operations.
13
SHONEY'S, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS
FOR THE TWENTY-EIGHT WEEKS ENDED MAY 14, 2000
(In thousands, except per share data)
[Enlarge/Download Table]
Pro Forma
Historical Pro Forma Historical
5/14/00 Adjustments 5/14/00
-------------------------------------------
Total Revenues $ 452,526 $ 452,526
Costs and expenses
Cost of sales 397,949 397,949
General and administrative expenses 33,503 33,503
Interest expense 20,433 $ (3,874) (a) 16,559
--------- --------- ---------
Total costs and expenses 451,885 (3,874) 448,011
Income before income taxes 641 3,874 (b) 4,515
Provision for income taxes 272 0 (b) 272
--------- --------- ---------
Net income $ 369 $ 3,874 $ 4,243
========= ========= =========
Earnings per common share
Basic:
Net income $ 0.01 $ 0.08 $ 0.08
========= ========= ========
Diluted:
Net income $ 0.01 $ 0.08 $ 0.08
========= ========= ========
Weighted average shares outstanding
Basic 50,253,042 50,253,042
Diluted 50,312,907 50,312,907
See notes to unaudited pro forma consolidated condensed statements of
operations.
14
SHONEY'S, INC.
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(a) Reflects the inclusion of the interest expense and amortization of
deferred financing costs related to the new debt, assuming a 10.6%
interest rate, and the elimination of interest expense associated
with the subordinated convertible debentures, due 2002 and the
subordinated zero coupon debentures, due 2004 and the repayment of
the existing bank debt facility with the net proceeds of the new
debt.
(b) Reflects no income tax provision applied to the adjusted loss before
income taxes due to a decrease in the valuation allowance for
deferred tax assets during the year ended October 31, 1999 and
reflects no income tax provision applied to the adjusted income
before income taxes due to a decrease in the valuation allowance for
deferred tax assets in the twenty-eight weeks ended May 14, 2000.
Note: The unaudited pro forma consolidated condensed statements of
operations exclude the effects of the extraordinary gain of $86,176
resulting from the purchase of the notes (net of expenses) pursuant
to the tender offers at a substantial discount to their related
principal amount ($94,623), the write-off of unamortized debt issue
costs ($4,447) and the related tax effects ($4,000).
Note: The historical consolidated condensed statement of operations for
the year ended October 31, 1999 has not been restated to reflect the
Company's decision on April 24, 2000 to close or sell its remaining
casual dining restaurants due to the insignificance of the casual
dining line of business to the Company's fiscal 1999 financial
statements. The unaudited historical consolidated condensed
statement of operations for the twenty-eight weeks ended May 14,
2000 reflects the results of operations of the Company's continuing
operations.
15
Financial Ratios
[Download Table]
Year Ended Twenty-Eight Weeks Ended
October 25, October 31, May 9, May 14,
1998 1999 1999 2000
---------------------------------------------------------
Ratio of earnings
to fixed charges (1) -- -- -- 1.0
Pro forma
ratio of earnings
to fixed charges -- -- -- 1.2
Book value per
common share $(2.86)
Pro forma book value
per common share $(1.15)
(1) The ratio of earnings to fixed charges is calculated by dividing
earnings by fixed charges. For this purpose, "earnings" means income
(loss) before provision (benefit) for income taxes and extraordinary
items plus fixed charges (other than capitalized interest). "Fixed
charges" means total interest whether capitalized or expensed
(including the portion of rent expense representative of interest
costs) on outstanding debt plus (i) debt related fees and (ii)
amortization of deferred financing costs. Earnings were inadequate
to cover fixed charges in the fiscal years ended October 31, 1999 and
October 25, 1998 by $29,961 and $79,492, respectively. Earnings were
inadequate to cover fixed charges for the twenty-eight weeks ended
May 9, 1999 by $11,580. Earnings were adequate to cover fixed
charges for the twenty-eight weeks ended May 14, 2000 by $641. On
a pro forma basis, earnings were inadequate to cover fixed charges
for the fiscal year ended October 31,1999 by $19,149. On a pro
forma basis, earnings were adequate to cover fixed charges for the
twenty-eight weeks ended May 14, 2000 by $4,515.
16
THE TENDER OFFERS AND CONSENT SOLICITATIONS
PURPOSE. The purpose of the Tender Offers is to enable the Company to
eliminate or reduce the debt evidenced by the Notes. All of the Notes
purchased by the Company upon the consummation of the Tender Offers will be
retired by the Company. The purpose of the Solicitation is to increase the
Company's financial and operating flexibility by eliminating or reducing the
restrictions contained in the Indentures.
The Tender Offers also may give Holders who are considering the sale of
all or some of their Notes the opportunity to sell their Notes for a higher
price than may have been available on the open market immediately prior to
the announcement of the Tender Offers and without the usual transaction costs
associated with market sales. No commissions are payable to either the
Dealer Manager, the Information Agent or the Depositary by Holders who tender
their Notes in the Tender Offers. There may be adverse consequences to the
Holders of Notes who do not tender them in the Tender Offers. See "Special
Factors-Adverse Effect of Proposed Amendments on Holders Who Do Not Tender".
Under the terms of the Tender Offers, Notes acquired by the Company will
be purchased by the Company at a substantial discount to their stated
principal amount. Accordingly, if the Company acquires all $177,358,000
principal amount at maturity of the LYONs currently outstanding and all
$51,563,000 principal amount of the TPI Debentures currently outstanding, the
Company will recognize an extraordinary gain after giving effect to
unamortized debt issuance costs and transaction costs, of approximately
$86.2 million. Such extraordinary gain represents the excess of the stated
principal or accreted value amount of the Notes over their respective
purchase prices, net of expenses. As of May 14, 2000, the Company had, for
federal income tax purposes, an accumulated net operating loss carry-forward
of approximately $67.0 million. Transaction costs with respect to the Tender
Offers are expected to be approximately $3.0 million. The total amount of
funds required by the Company to pay the Tender Offer and Consent
Consideration and accrued and unpaid interest on the TPI Debentures and to
pay fees and expenses relating to the Tender Offers and Solicitation will be
approximately $84.0 million. The Company expects to obtain such funds from the
New Financing. See "The Company-Source and Amount of Funds".
TERMS. Upon the terms and subject to the conditions set forth in the
Offers, the Company is offering to purchase any and all outstanding:
TPI Debentures for a cash purchase price of $691.59 per $1,000
principal amount (the "Debenture Purchase Price"); and
LYONs for a cash purchase price of $250.00 per $1,000 of principal
amount at maturity (the "LYONs Purchase Price").
The Company also will pay to Holders of the TPI Debentures any and all
accrued and unpaid interest on the TPI Debentures to but excluding the
settlement date. In addition, the Company is soliciting Consents to approve
the adoption of certain proposed amendments to the Indentures under which
the Notes were issued (the "Proposed Amendments"). Holders who
17
tender their TPI Debentures and LYONs in the Tender Offers will be deemed to
have delivered a corresponding Consent, and such Holders may not deliver
Consents without tendering their Notes in the Tender Offers. See "Proposed
Amendments to the Indentures". The consideration to be paid by the Company
for Consents is included in the LYONs Purchase Price and the Debenture
Purchase Price.
The time by which Holders must tender Notes and deliver Consents in
order to be eligible to have their Notes purchased pursuant to the Tender
Offers will be 11:59 p.m., New York City time, on August 14, 2000,
unless extended (such time and date, as the same may be extended, the
"Expiration Date"). Any such extension will be announced in a press release.
See "-Extension, Amendment and Termination of Tender Offers".
The Tender Offers are conditioned upon, among other things, receipt by
the Depositary of valid and unrevoked tenders and Consents from Holders (the
"Minimum Condition") of at least (a) $159,622,200 (90%) principal amount at
maturity of the outstanding LYONs and (b) $46,406,700 (90%) principal amount
of the outstanding TPI Debentures. See "-Conditions". As of July 14, 2000,
$177,358,000 of aggregate principal amount at maturity of the LYONs and
$51,563,000 of aggregate principal amount of TPI Debentures are outstanding
for purposes of determining whether the Minimum Condition has been satisfied.
As of July 14, 2000, the Company had received written commitments from
Holders of $37,584,000 (72.9%) in principal amount of TPI Debentures and
$123,547,000 (69.7%) in principal amount at maturity of LYONs to tender
their Notes (and thereby consent to the Proposed Amendments to the
Indentures) in the Offer. See "Special Factors--Agreements with Noteholders.
Notes purchased pursuant to the Tender Offers will be paid for in same-
day funds on the Payment Date, which will be the second business day after
the Expiration Date, or as soon as practicable thereafter. See "-Acceptance
for Payment and Payment for the Notes".
Under United States federal tax laws, the Depositary may be required to
withhold 31% of the amount of any payments made to certain Holders pursuant
to the Tender Offers. See "Certain U.S. Federal Income Tax Consequences".
CONDITIONS. The Tender Offers and Solicitation and the payment of the
Tender Offer and Consent Consideration are conditioned upon each of the
following:
(1) satisfaction of the Minimum Condition;
(2) execution by the trustee under each of the Indentures (the
"Trustee") of the Supplemental Indentures implementing the Proposed
Amendments;
(3) receipt by the Company of debt financing sufficient to (a) pay the
Tender Offer and Consent Consideration; (b) refinance substantially all of
the remaining indebtedness of the Company; and (c) pay fees and expenses
associated with the foregoing, all on terms acceptable to the Company (or the
Company being satisfied that such financing will be received substantially
concurrently with the Expiration Date (the "Funding Condition"));
18
(4) no statute, rule, regulation, judgment, order, stay, decree or
injunction shall have been threatened, proposed, sought, promulgated,
enacted, entered, enforced, or deemed to be applicable by any court or
governmental regulatory or administrative agency, authority or tribunal,
domestic or foreign, which, in the reasonable judgment of the Company, would
or might directly or indirectly prohibit, prevent, restrict or delay
consummation of the Tender Offers or Solicitation or that could have a
material adverse effect upon the Company;
(5) there shall not have occurred (a) any general suspension of,
shortening of hours for or limitation on prices for trading in securities on
the New York Stock Exchange or in the over-the-counter market (whether or not
mandatory); (b) any significant adverse change in the price of the LYONs or
the TPI Debentures or in the United States' securities or financial markets;
(c) a significant impairment in the trading market for debt securities; (d)
a declaration of a banking moratorium or any suspension of payments in
respect of banks by federal or state authorities in the United States
(whether or not mandatory); (e) a commencement of a war, armed hostilities or
other national or international crisis; (f) any limitation (whether or not
mandatory) by any governmental authority on, or other event having a
reasonable likelihood of affecting, the extension of credit by banks or other
lending institutions in the United States; (g) any significant change in
United States currency exchange rate or a suspension of, or limitation on,
the markets therefor (whether or not mandatory); or (h) in the case of any of
the foregoing existing at the time of the commencement of the Tender Offers,
a significant acceleration or worsening thereof;
(6) the Trustee under the Indentures shall not have objected in any
respect to, or taken any action that could, in the reasonable judgment of the
Company, adversely affect the consummation of the Tender Offers or the
Solicitation or the Company's ability to effect any of the Proposed
Amendments, or shall have taken any action that challenges the validity or
effectiveness of the procedures used by the Company in soliciting the
Consents to the Proposed Amendments (including the form thereof) or in the
making of the Tender Offers or the Solicitation or the acceptance of or
payment for any of the LYONs, the TPI Debentures or any of the Consents; and
(7) there shall not have occurred or be likely to occur any event or
series of events that, in the reasonable judgment of the Company, would or
might prohibit, prevent, restrict or delay consummation of the Tender Offers
and Solicitation or that will, or is reasonably likely to, impair the
contemplated benefits to the Company of the Tender Offers and Solicitation,
or otherwise result in the consummation of the Tender Offers and Solicitation
not being or not being reasonably likely to be in the best interest of the
Company.
The foregoing conditions are for the sole benefit of the Company and may
be asserted by the Company regardless of the circumstances (including any
action or inaction by the Company) giving rise to such condition or may be
waived by the Company in whole or in part at any time and from time to time
in its sole discretion. If any condition to the Tender Offers and
Solicitation is not satisfied or waived by the Company prior to the
Expiration Date, the Company reserves the right (but shall not be obligated),
subject to applicable law, (i) to terminate the Tender Offers and
Solicitation and return the tendered Notes to the tendering Holders; (ii) to
waive all unsatisfied conditions and accept for payment and purchase all
Notes that are validly tendered (and not withdrawn) prior to the Expiration
Date; (iii) to extend such Tender Offers and retain the Notes that have been
tendered during the period for which the Tender Offers and, if applicable,
19
Solicitation are extended; or (iv) to amend the Tender Offers and
Solicitation. The failure by the Company at any time to exercise any of the
foregoing rights will not be deemed a waiver of or otherwise affect any other
rights and each such right will be deemed an ongoing right which may be
asserted at any time and from time to time. Any determination by the Company
concerning the events described above will be final and binding upon all
parties.
Each of the Indentures premits the execution of the applicable
Supplemental Indenture containing the Proposed Amendments with the Consent of
the Holders of at least a majority in principal amount of the applicable
Notes outstanding as of the date the Supplemental Indenture is executed.
Therefore, it is possible, if the Company exercises its right to waive the
Minimum Condition, for the Proposed Amendments to become effective even if
less than 90% (but greater than 50%) of the Holders of each series of Notes
tender their Notes and deliver Consents in the Tender Offers.
ACCEPTANCE FOR PAYMENT AND PAYMENT FOR THE NOTES. Upon the terms and
subject to the conditions of the Tender Offers, the Company will accept for
payment all Notes that are validly tendered pursuant to the Tender Offers
prior to the Expiration Date and not validly withdrawn. For purposes of the
Tender Offers, the Company will be deemed to have accepted for payment
tendered Notes if, as and when the Company gives oral or written notice to
the Depositary of its acceptance for payment of such Notes. Payment for Notes
accepted for payment pursuant to the Tender Offers will be made by deposit of
funds with the Depositary, which will act as agent for the tendering Holders
for the purpose of receiving payments from the Company and transmitting such
payments to the tendering Holders. Notes purchased pursuant to the Tender
Offers (and payments for the corresponding Consents) will be paid for in
same-day funds on the second business day after the Expiration Date, or as
soon as practicable thereafter.
WITHDRAWAL AND REVOCATION RIGHTS. Tenders of Notes may be withdrawn at
any time prior to the Expiration Date and, unless accepted by the Company,
any time after 40 business days after the date hereof. A valid withdrawal of
tendered Notes will constitute the concurrent valid revocation of such
Holder's related Consent, once given. If the Tender Offers are terminated
without any Notes being purchased thereunder, the Notes tendered pursuant to
the Tender Offers will be promptly returned to the tendering Holder and
Consents will have no further force or effect.
For a withdrawal of Notes to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary
at its address set forth on the back cover of this Statement. The withdrawal
notice must specify the name of the person who tendered the Notes to be
withdrawn; must contain a description of the Notes to be withdrawn; the
certificate numbers shown on the particular certificates evidencing such
Notes and the aggregate principal amount represented by such Notes; and must
be signed by the Holder of such Notes in the same manner as the original
signature on the Letter of Transmittal and Consent (including any required
signature guarantees) or be accompanied by evidence satisfactory to the
Company that the person withdrawing the tender has succeeded to the
beneficial ownership of the Notes. In addition, the notice of withdrawal
must specify, in the case of Notes tendered by delivery of certificates for
such Notes, the name of the registered Holder (if different from that of the
tendering Holder) or, in the case of Notes tendered by book-entry transfer,
the name and number of the account at DTC
20
to be credited with the withdrawn Notes. The signature on the notice of
withdrawal must be guaranteed by an Eligible Institution (as defined herein)
unless such Notes have been tendered for the account of an Eligible
Institution. If certificates for the Notes to be withdrawn have been
delivered or otherwise identified to the Depositary, a signed notice of
withdrawal will be effective immediately upon receipt by the Depositary of
written or facsimile transmission notice of withdrawal even if physical
release is not yet effected.
Withdrawal of tenders of Notes may not be rescinded, and any Notes
properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Tender Offers. Properly withdrawn Notes may, however, be
retendered by again following one of the procedures described in "-Procedures
for Tendering Notes And Delivering Consents" below at any time prior to the
Expiration Date.
Consents may be withdrawn at any time prior to the Expiration Date. To
withdraw a Consent, a Holder must withdraw the corresponding tendered Notes
in the manner set forth above. Consents may not be withdrawn without a
withdrawal of the corresponding tendered Notes. A withdrawal of a Consent
may not be rescinded.
Withdrawals of Notes and revocation of Consents can only be accomplished
in accordance with the foregoing procedures.
EXTENSION, AMENDMENT AND TERMINATION OF TENDER OFFERS. The Company
expressly reserves the right, at any time or from time to time, regardless of
whether or not the conditions set forth in "-Conditions" shall have been
satisfied, subject to applicable law, (i) to extend the Expiration Date for
the Tender Offers; (ii) to amend the Tender Offers and Solicitation in any
respect; or (iii) to terminate the Tender Offers and Solicitation prior to
the Expiration Date and return the Notes tendered pursuant thereto, in each
case by giving written notice of such extension, amendment or termination to
the Depositary. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement thereof, with the announcement
in the case of an extension to be issued no later than 9 a.m., New York City
time, on the first business day after the previously scheduled Expiration
Date. Without limiting the manner in which the Company may choose to make any
public announcement, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to the Dow Jones News Service.
The Company, in its sole discretion, shall decide whether to exercise
its right to extend the Expiration Date for the Tender Offers. Tendered
Notes may be withdrawn at any time on or prior to the Expiration Date and,
unless accepted for payment, at any time after 40 business days following the
date hereof. See "-Withdrawal and Revocation Rights".
PROCEDURES FOR TENDERING NOTES AND DELIVERING CONSENTS. For a Holder to
validly tender Notes pursuant to the Tender Offers, a properly completed and
duly executed Letter of Transmittal and Consent (or facsimile thereof), with
any required signature guarantee, or (in the case of a book-entry transfer
for which acceptance is being electronically transmitted through the
Automatic Tender Offer Program ("ATOP")) an Agent's Message in lieu of the
Letter of Transmittal and Consent, and any other required documents, must be
received by the Depositary
21
at its address set forth on the back cover of this Statement prior to the
Expiration Date. The tender of Notes will be deemed to be the delivery of
Consents with respect to such Notes. In addition, prior to the Expiration
Date, either (a) certificates for tendered Notes must be received by the
Depositary at such address or (b) such Notes must be transferred pursuant to
the procedures for book-entry transfer described below (and a confirmation
of such tender must be received by the Depositary, including an Agent's
Message if the tendering Holder has not delivered a Letter of Transmittal
and Consent). The term "Agent's Message" means a message, transmitted by DTC
to and received by the Depositary and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgment
from the tendering participant, which acknowledgment states that such
participant has received and agrees to be bound by the Letter of Transmittal
and Consent and that the Company may enforce such Letter of Transmittal and
Consent against such participant.
If the Notes are held of record in the name of a person other than the
signer of the Letter of Transmittal and Consent, or if certificates for
unpurchased Notes are to be issued to a person other than the registered
Holder, the certificates must be endorsed or accompanied by appropriate bond
powers, in either case signed exactly as the name of the registered Holder
appears on the certificates, with the signature on the certificates or bond
powers guaranteed as described below.
The tender of Notes pursuant to the Tender Offers by one of the
procedures set forth above will constitute (a) an agreement between the
tendering Holder and the Company in accordance with the terms and subject to
the conditions of the Tender Offers and (b) the Consent of the tendering
Holder to the Proposed Amendments.
The method of delivery of the applicable Letter of Transmittal and
Consent, certificates for Notes and all other required documents is at the
election and risk of the tendering Holder. If a Holder chooses to deliver by
mail, the recommended method is by registered mail with return receipt
requested, properly insured. In all cases, sufficient time should be allowed
to ensure timely delivery.
All questions as to the form of documents and validity, eligibility
(including time of receipt), acceptance for payment and withdrawal of
tendered Notes or Consents will be determined by the Company, in its sole
discretion, and its determination will be final and binding. The Company
reserves the absolute right to reject any and all tenders of Notes or
deliveries of Consents that it determines are not in proper form or the
acceptance for payment of or payment for which may, in the opinion of its
counsel, be unlawful. The Company also reserves the absolute right in its
sole discretion to waive any of the conditions of the Tender Offers or
Solicitation or any defect or irregularity in the tender of Notes or
deliveries of Consents of any particular Holder, whether or not similar
conditions, defects or irregularities are waived in the case of other
Holders. The Company's interpretation of the terms and conditions of the
Tender Offers and Solicitation (including the instructions in the Letters of
Transmittal and Consent) will be final and binding. None of the Company, the
Depositary, the Dealer Manager, the Information Agent, the Trustee or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or any notices of withdrawal or will incur any
liability for failure to give any such notification.
22
NEED FOR GUARANTEE OF SIGNATURE. Signatures on a Letter of Transmittal
and Consent must be guaranteed by a recognized participant (a "Medallion
Signature Guarantor") in the Securities Transfer Agents Medallion Program,
unless the Notes tendered thereby are tendered (a) by the registered Holder
of such Notes and that Holder has not completed either of the boxes entitled
"Special Issuance/Delivery Instructions" on the Letter of Transmittal and
Consent or (b) for the account of a firm that is a member of a registered
national securities exchange or the National Association of Securities
Dealers, Inc. or is a commercial bank or trust company having an office in
the United States (each, an "Eligible Institution").
BOOK-ENTRY DELIVERY OF THE NOTES. The Depositary has established an
account with respect to the Notes at DTC for purposes of the Tender Offers.
Any financial institution that is a participant in the DTC system may make
book-entry delivery of Notes by causing DTC to transfer such Notes into the
Depositary's account in accordance with DTC's procedure for such transfer.
Although delivery of Notes may be effected through book-entry at DTC, the
Letter of Transmittal and Consent (or facsimile thereof), with any required
signature guarantees, or (in the case of a book-entry transfer) an Agent's
Message in lieu of the Letter of Transmittal and Consent, and any other
required documents, must be transmitted to and received by the Depositary
prior to the Expiration Date at its address set forth on the back cover of
this Statement. Delivery of such documents to DTC does not constitute
delivery to the Depositary.
GUARANTEED DELIVERY. If a Holder desires to tender Notes pursuant to
the Tender Offers and such Holder's certificates are not immediately
available or time will not permit all required documents to reach the
Depositary on or prior to the Expiration Date, or such Holder cannot
complete the procedures for book-entry transfer on a timely basis, such
Notes may nevertheless be tendered provided that all of the following
conditions are satisfied:
(a) The tender is made by or through an Eligible Institution;
(b) On or prior to the Expiration Date, the Depositary receives from
such Eligible Institution at the address for the Depositary set forth on the
back cover of this Statement, a properly completed and duly executed Notice
of Guaranteed Delivery and Consent (by mail, hand delivery or facsimile).
Such Notice of Guaranteed Delivery and Consent shall (i) be substantially in
the form made available by the Company; (ii) set forth the name and address
of the Holder; (iii) describe the Notes and the principal amount of the Notes
tendered; (iv) state that the tender is being made thereby and (v) guarantee
that, within three New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery and Consent, a duly executed
Letter of Transmittal and Consent (or a manually signed facsimile thereof)
with any required signature guarantees or an Agent's Message in lieu of the
Letter of Transmittal and Consent together with the certificates representing
such Notes (or appropriate book-entry confirmation) and any other documents
required by the Letter of Transmittal and Consent and the instructions
thereto will be deposited by the Eligible Institution with the Depositary;
and
23
(c) The certificates for the tendered Notes in proper form for transfer
(or confirmation of book-entry transfer into the Depositary's account at
DTC), together with a properly completed and duly executed Letter of
Transmittal and Consent (or a manually signed facsimile thereof) with any
required signature guarantees, or confirmation of a book-entry transfer of
such Notes into the Depositary's account with DTC as described above,
including an Agent's Message in connection therewith, and all other documents
required by the Letter of Transmittal and Consent and the instructions
thereto, are received by the Depositary within three New York Stock Exchange
trading days after the execution of such Notice of Guaranteed Delivery and
Consent.
In all cases, payment for Notes tendered and accepted for payment
pursuant to the Tender Offers will be made only after timely receipt by the
Depositary of certificates for such Notes or confirmation of book-entry
transfer into the Depositary's account at DTC, a properly completed and duly
executed Letter of Transmittal and Consent (or manually signed facsimile
thereof) with any required signature guarantees, or Agent's Message and any
other documents required by the Letter of Transmittal and Consent.
ABSENCE OF APPRAISAL RIGHTS. Holders of the Notes do not have any
appraisal or dissenters' rights under the Tennessee Business Corporation Act
or the Indentures in connection with the Tender Offers. The Company intends
to conduct the Tender Offers in accordance with applicable law.
24
DESCRIPTION OF THE NOTES
LIQUID YIELD OPTION NOTES DUE 2004. The following summary of certain
terms of the LYONs does not purport to be complete and is qualified in its
entirety by reference to the LYONs certificates.
Notes $177,358,000 outstanding aggregate principal amount
at maturity of Liquid Yield Option Notes Due 2004
(Zero Coupon - Subordinated.)
Issuer Shoney's, Inc.
Interest Zero coupon (accretion rate of 8.50% per annum).
Maturity April 11, 2004.
Conversion Convertible at the Holder's option into Shares at
anytime prior to the close of business on the final
maturity date of the LYONs, unless previously
redeemed or repurchased, at a conversion rate of
29.349 Shares per $1,000 principal amount at
maturity of LYONs (equivalent to a conversion price
of $34.07 in principal amount per Share).
Optional Redemption The LYONs are redeemable on at least 32 days' nor
more than 60 days' notice at the option of the
Company, in whole or in part, at any time at the
redemption prices set forth in the LYONs.
Repurchase at Option
of Holders Upon a
Change of Control None.
Ranking The LYONs are subordinate to all existing and future
Senior Indebtedness (as defined in the LYONs
Indenture) of the Company. As of May 14, 2000, the
Senior Indebtedness (as defined in the LYONs
Indenture) of the Company was approximately $188.8
million. The LYONs Indenture contains no
limitations on the incurrence of additional Senior
Indebtedness or other indebtedness by the Company
or any of its subsidiaries.
25
8-1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2002. The following
summary of certain terms of the TPI Debentures does not purport to be
complete and is qualified in its entirety by reference to the TPI Debentures.
Notes $51,563,000 outstanding aggregate principal amount
of 8-1/4% Convertible Subordinated Debentures Due
2002.
Issuer Shoney's, Inc. (assumed from TPI Enterprises, Inc.).
Guarantor TPI Restaurants, Inc. (which is intended to be
merged into Shoney's, Inc, the issuer).
Interest Payable semi-annually on January 15 and July 15 of
each year at a rate of 8-1/4% per annum.
Maturity July 15, 2002.
Conversion Convertible at the Holder's option into Shares at
anytime prior to the close of business on the final
maturity date of the TPI Debentures, unless
previously redeemed or repurchased, at an adjusted
conversion rate of 50.508 Shares per $1,000
principal amount of TPI Debentures (equivalent to a
conversion price of $19.80 principal amount per
Share).
Optional Redemption The TPI Debentures are redeemable on at least 30
days' nor more than 60 days' notice at the option
of the Company, in whole or in part, at any time at
the redemption prices set forth in the TPI
Indenture.
Repurchase Upon a
Change of Control In the event a Change of Control (as defined in the
TPI Indenture) occurs, each Holder of a TPI
Debenture may require that the Company repurchase
all or a portion of such Debenture for cash at a
repurchase price of 100% of the principal amount of
the TPI Debentures to be repurchased plus accrued
and unpaid interest to the repurchase date, as
provided in the TPI Indenture.
Ranking The TPI Debentures are subordinate to all existing
and future Senior Indebtedness (as defined in the
TPI Indenture) of the Company and the Guarantor.
As of May 14, 2000, the Senior Indebtedness (as
defined in the TPI Indenture) of the Company and
Guarantor was approximately $316.9 million. The
Indenture contains no limitations on the incurrence
of additional Senior Indebtedness or other
indebtedness by the Company, Guarantor or any of
their respective subsidiaries. The Company believes
that the TPI Debentures are subordinate to the LYONs.
26
MARKET AND TRADING INFORMATION. The LYONs currently are listed on the
New York Stock Exchange. The NYSE, however, has suspended trading in the
LYONs (effective as of the opening of business on July 12, 2000) and has
indicated its intention to apply to the Commission to delist the LYONs. The
last reported trade of the LYONs on the NYSE on July 11, 2000 was at $232.50
per $1,000 principal amount at maturity. The LYONs and the TPI Debentures
currently are traded over-the-counter. There is not an established reporting
system or trading market for trading in the TPI Debentures. Accordingly,
Banc of America Securities LLC has advised the Company that there is no
practical way to determine the trading history of the TPI Debentures.
However, the Company believes that trading in the LYONs and TPI Debentures
has been limited and sporadic. Although the Company expects any untendered
Notes to continue to be traded after the consummation of the Tender Offers,
to the extent that the Notes are traded, the prices of Notes may fluctuate
depending on the trading volume and the balance between buy and sell orders.
The Company believes that the trading market for the Notes that remain
outstanding after the Tender Offers will be very limited. See "Special
Factors-Reduced Liquidity of the Notes".
The Shares into which the Notes are convertible currently are listed on
the New York Stock Exchange under the symbol "SHN". The NYSE, however, has
suspended trading in the Shares and has indicated its intention to apply to
the Commission to delist the Shares. As of July 12, 2000, the Shares began
trading on the OTCBB under the symbol "SHOY". On July 14, 2000, the last
reported sales price of the Shares on the OTCBB was $1.06.
The following table sets forth certain information relating to the
trading history of the LYONs and the Shares on the NYSE during the last two
fiscal years and for the first two quarters of fiscal 2000. You are urged
to obtain a current quotation.
[Download Table]
SHARES(1) LYONs (2)
----------------------------------------------------
High Low High Low
---- --- ---- ---
2000
First Quarter $1.56 $1.00 22.500 12.000
Second Quarter $1.13 $0.63 20.5000 11.000
1999
First Quarter $3.63 $1.31 34.500 22.000
Second Quarter $2.94 $1.81 25.000 21.000
Third Quarter $2.50 $2.00 28.000 22.125
Fourth Quarter $2.50 $1.44 23.875 19.000
1998
First Quarter $5.00 $3.00 44.500 40.000
Second Quarter $5.88 $3.63 48.000 39.500
Third Quarter $5.06 $2.75 48.250 42.000
Fourth Quarter $3.44 $1.50 44.125 23.500
___________________
(1) Source - Bloomberg: NYSE Quotes. Although the OTCBB is the
Company's current principal trading market for the Shares, the
Shares did not trade theron until July 12, 2000. Until that date,
the Company's principal trading market was the NYSE.
(2) Source - Bloomberg: NYSE Quotes. Prices represent percentage of
principal amount at maturity.
27
The Company and its affiliates, including its executive officers and
directors, will be prohibited under applicable federal securities law from
repurchasing additional Notes outside of the Tender Offers until at least the
10th business day after the Expiration Date. Following such time, if any
Notes remain outstanding, the Company may purchase additional Notes in the
open market, in private transactions, through a subsequent tender offer, or
otherwise, any of which may be consummated at purchase prices higher or lower
than that offered in the Tender Offers. The decision to repurchase
additional Notes, if any, will depend upon many factors, including the market
price of the Notes, the results of the Tender Offers, the business and
financial position of the Company, and general economic and market
conditions. Any such repurchase may be on the same terms or on terms more or
less favorable to Holders than the terms of the Tender Offers as described
in this Statement. In addition, if the Tender Offers are not consummated,
the Company may exercise the Options granted pursuant to the Letter
Agreements described under the caption "Special Factors-Agreements with
Noteholders."
PROPOSED AMENDMENTS TO THE INDENTURES
GENERAL. The LYONs are issued pursuant to an indenture dated April 1,
1989 by and between the Company and The Bank of New York, successor to Sovran
Bank/Central South, as trustee (the "LYONs Indenture"). The TPI Debentures
are issued pursuant to an indenture dated as of July 15, 1992, as amended by
a First Supplemental Indenture dated as of September 9, 1996 (as amended, the
"TPI Indenture"), between and among the Company, TPI and The Bank of New
York, as trustee. The LYONs Indenture and TPI Indenture are referred to
collectively in this Statement as the "Indentures". The Indentures all the
execution of the Supplemental Indentures (as defined below) containing the
Proposed Amendments with the Consent of the Holders of at least a majority
in principal amount of each of the series of Notes outstanding on the date
the Supplemental Indentures are executed.
The Proposed Amendments would be set forth in supplemental indentures to
each of the Indentures (the "Supplemental Indentures"). The Supplemental
Indentures would be executed promptly following satisfaction of the Minimum
Condition; however, the Supplemental Indentures will provide that the
Proposed Amendments will not become operative unless and until validly
tendered Notes are purchased pursuant to the Tender Offers. The execution and
delivery of the applicable Letter of Transmittal and Consent by a Holder
tendering Notes will constitute the Consent of such Holder to the Proposed
Amendments. Holders who tender their Notes will be deemed to deliver a
corresponding Consent to the Proposed Amendments. Such Holders may not
deliver a separate Consent.
If Notes are not purchased pursuant to the Tender Offers (or if the
Minimum Condition is not satisfied), the Proposed Amendments will not become
operative.
If the Tender Offers are consummated and the Proposed Amendments become
effective, the Proposed Amendments will be binding on all non-tendering
Holders. The modification or elimination of restrictive covenants and other
provisions pursuant to the Proposed Amendments may be adverse to the
interests of non-tendering Holders. See "Special Factors-Adverse Effect of
Proposed Amendments on Holders Who Do Not Tender".
28
PROPOSED AMENDMENTS. The Proposed Amendments to the LYONs Indenture and
the TPI Indenture would delete the restrictions on the ability of the Company
and, with respect to the TPI Indenture, the Guarantor, to merge into or
consolidate with, or convey, transfer or lease all or substantially all of
its assets to, another person. The Proposed Amendments to the TPI Indenture
also would (i) eliminate as events of default cross-defaults and judgments
entered against the Company and/or its subsidiaries; (ii) delete provisions
requiring the Company and the Guarantor to preserve their respective
existences, rights, corporate licenses and franchises; (iii) delete
requirements that the Company maintain its and its subsidiaries' respective
properties and pay taxes and other claims and that the Company and the
Guarantor maintain insurance; and (iv) eliminate limitations on the ability
of the Company and its subsidiaries to make certain restricted payments and
investments and to create any encumbrance or restriction on the ability of
certain of the Company's subsidiaries to make to the Company any
distributions, loans or advances, pay to the Company any dividends, or
transfer to the Company any of its property or assets. The Company has
determined to eliminate these restrictions in order to increase the Company's
financial and operating flexibility.
The full text of the proposed substantive amendments to the LYONs
Indenture and the TPI Indenture are set forth, respectively, in Annex A and
Annex B hereto. The Supplemental Indentures will contain other modifications
to certain other sections of the Indentures to conform those sections to the
proposed amendments set forth in Annex A and Annex B. Copies of the proposed
Supplemental Indentures may be obtained from the Information Agent.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING SUMMARY IS A GENERAL DISCUSSION OF CERTAIN UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES APPLICABLE UNDER CURRENT LAW TO THE SALE OF
NOTES PURSUANT TO THE TENDER OFFERS BY A "U.S. HOLDER" (WHICH, FOR PURPOSES
OF THE OFFER, MEANS A HOLDER OF NOTES THAT IS (A) AN INDIVIDUAL CITIZEN OR
RESIDENT OF THE UNITED STATES, (B) A CORPORATION ORGANIZED IN OR UNDER THE
LAWS OF THE UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF OR (C)
OTHERWISE SUBJECT TO UNITED STATES FEDERAL INCOME TAX ON A NET INCOME BASIS
IN RESPECT OF THE NOTES). THE DISCUSSION DOES NOT DEAL WITH SPECIAL CLASSES
OF HOLDERS, SUCH AS DEALERS IN SECURITIES OR CURRENCIES, TRADERS IN
SECURITIES ELECTING TO MARK-TO-MARKET, BANKS, FINANCIAL INSTITUTIONS,
INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS, HOLDERS THAT ARE NOT U.S.
HOLDERS, PERSONS HOLDING NOTES AS A POSITION IN A "STRADDLE" OR CONVERSION
TRANSACTION, OR AS PART OF A "SYNTHETIC SECURITY" OR OTHER INTEGRATED
FINANCIAL TRANSACTION OR PERSONS THAT HAVE A FUNCTIONAL CURRENCY OTHER THAN
THE U.S. DOLLAR. IN ADDITION, THE DISCUSSION DOES NOT DESCRIBE ANY TAX
CONSEQUENCES ARISING OUT OF THE LAWS OF ANY STATE OR LOCAL OR FOREIGN
JURISDICTION. THIS DISCUSSION ASSUMES THAT THE NOTES ARE HELD AS "CAPITAL
ASSETS" WITHIN THE MEANING OF SECTION 1221 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED. THE COMPANY HAS NOT SOUGHT ANY RULING FROM THE INTERNAL
REVENUE SERVICE (THE "IRS") WITH RESPECT TO THE STATEMENTS MADE AND THE
CONCLUSIONS REACHED IN THIS DISCUSSION, AND THERE CAN BE NO ASSURANCE THAT
THE IRS WILL AGREE WITH SUCH STATEMENTS AND CONCLUSIONS.
Sales of Notes pursuant to the Tender Offers by U.S. Holders will be
taxable transactions for United States federal income tax purposes. Subject
to the discussion of the market discount rules set forth below, a U.S. Holder
selling Notes pursuant to the Tender Offers will recognize capital gain or
loss in an amount equal to the difference between the amount of cash received
29
(other than amounts received attributable to accrued interest, which will be
taxed as such) and the U.S. Holder's adjusted tax basis in the Notes sold at
the time of sale. A U.S. Holder's adjusted tax basis in Notes generally will
equal the cost of the Notes to such U.S. Holder, increased by the amount of
any original issue discount and market discount previously taken into income
by the U.S. Holder, and reduced by the amount of any amortizable bond premium
previously amortized by the U.S. Holder with respect to the Notes. Capital
gain of a non-corporate U.S. Holder is generally subject to a maximum tax
rate of 20 percent in respect of property held for more than one year. The
deductibility of capital losses is limited.
An exception to the capital gain treatment described above may apply to
a U.S. Holder who purchased Notes at a "market discount." Subject to a
statutory de minimis exception, Notes have market discount if they were
purchased at an amount less than the adjusted issue price, in the case of the
LYONs, or less than the stated redemption price at maturity, in the case of
the TPI Debentures. In general, unless the U.S. Holder has elected to include
market discount in income currently as it accrues, any gain realized by a
U.S. Holder on the sale of Notes having market discount in excess of a de
minimis amount will be treated as ordinary income to the extent of the lesser
of (i) the gain recognized or (ii) the portion of the market discount that
has accrued (on a straight-line basis or, at the election of the U.S. Holder,
on a constant yield basis) while such Notes were held by the U.S. Holder.
In the case of a U.S. Holder who does not tender its Notes pursuant to
the Tender Offers, the adoption of the Proposed Amendments should not result
in a deemed exchange of the Notes because the Proposed Amendments should not
constitute a "significant modification" to the terms of the Notes for U.S.
federal income tax purposes as defined in applicable Treasury Regulations. In
such case, a Holder who does not tender its Notes pursuant to the Tender
Offers will not recognize any gain or loss for U.S. federal income tax
purposes upon the adoption of the Proposed Amendments and will have the same
adjusted tax basis and holding period in the Notes after the adoption of the
Proposed Amendments that such Holder had in the Notes immediately before such
adoption.
Alternatively, if the adoption of the Proposed Amendments would result
in a deemed exchange of Notes for new Notes ("New Notes"), it is unclear
whether the deemed exchange would constitute a tax-free recapitalization
involving an exchange of "securities." If such a deemed exchange did
constitute a recapitalization: (i) a non-tendering U.S. Holder generally
would not recognize gain or loss as a result of the deemed exchange, (ii) a
non-tendering U.S. Holder's adjusted tax basis in the New Notes generally
would equal such holder's adjusted tax basis in the Notes deemed to have been
exchanged in connection with the deemed exchange and (iii) a non-tendering
U.S. Holder's holding period in the New Notes generally would include such
holder's holding period for the Notes deemed to have been exchanged in
connection with the deemed exchange.
If such a deemed exchange did not qualify as a tax-free
recapitalization, a non-tendering U.S. Holder would recognize taxable gain
(or loss) equal to the excess (or shortfall) of (i) the "issue price" of the
New Notes (other than any portion thereof attributable to accrued but unpaid
interest on the Notes) over (ii) such holder's adjusted tax basis in the
Notes. The issue price of the New Notes would equal their fair market value
on the date of the deemed exchange, provided
30
that the New Notes are considered "publicly traded" as defined for these
purposes. Any recognized gain would be treated as ordinary income to the
extent of any accrued but unrecognized market discount. In addition, if such
deemed exchange did not qualify as a tax-free recapitalization: (i) a
non-tendering U.S. Holder's adjusted tax basis in the New Notes would equal
the issue price of the New Notes and (ii) a non-tendering U.S. Holder would
have a new holding period in the New Notes commencing on the day after the
deemed exchange.
Subject to a statutory de minimis exception, if the issue price of the
New Notes is less than their stated principal amount, the New Notes would
have original issue discount (OID) for U.S. federal income tax purposes, and
each non-tendering U.S. Holder (whether a cash or accrual basis taxpayer)
would be required to include such OID in ordinary income as it accrues under
a constant yield method without regard to the receipt of cash payments
attributable to such income.
Sales of Notes pursuant to the Tender Offers by U.S. Holders generally
will be subject to information reporting requirements. In addition, certain
U.S. Holders who fail to complete the Substitute Form W-9 included in the
Letters of Transmittal and Consent may be subject to backup withholding tax
at a rate of 31% with respect to payments the U.S. Holder receives pursuant
to the Tender Offers. Backup withholding tax is not an additional federal
income tax. Rather, the federal income tax liability of persons subject to
backup withholding tax will be offset by the amount of tax withheld. If
backup withholding tax results in an overpayment of federal income taxes, a
refund may be obtained from the IRS provided the required information is
furnished. Certain U.S. Holders (including, among others, corporations) are
not subject to these backup withholding tax and reporting requirements.
ALL HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE TAX CONSEQUENCES OF THE TENDER OFFERS IN THEIR
PARTICULAR CIRCUMSTANCES, INCLUDING THE APPLICATION OF
FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
DEALER MANAGER, DEPOSITARY AND INFORMATION AGENT
DEALER MANAGER. Banc of America Securities LLC is acting as the Dealer
Manager for the Company in connection with the Tender Offers and Solicitation
and has provided certain financial advisory services to the Company in
connection with the Tender Offers and Solicitation. The Company will pay the
Dealer Manager's reasonable and customary compensation for such services,
plus reimbursement for reasonable out-of-pocket expenses. The Company has
agreed to indemnify the Dealer Manager and financial advisor, including
liabilities under federal securities laws. At any time, the Dealer Manager
may trade the Notes for its own account or for the accounts of customers and,
accordingly, may hold a long or short position in the Notes. All inquiries
and correspondence addressed to the Dealer Manager relating to the Tender
Offers and Solicitation should be directed to the address or telephone number
set forth on the back cover of this Statement.
The Dealer Manager and its affiliates have in the past provided banking
and investment banking services to the Company for which it has received
customary compensation. From time
31
to time, the Dealer Manager and its affiliates may provide other services
to the Company and its affiliates.
DEPOSITARY. The Depositary for the Tender Offers and Solicitation is
The Bank of New York. All deliveries, correspondence and questions sent or
presented to the Depositary relating to the Tender Offers and the
Solicitation should be directed to the address or telephone number set forth
on the back cover of this Statement. The Company will pay the Depositary
reasonable and customary compensation for its services in connection with the
Tender Offers and Solicitation, plus reimbursement for reasonable out-of-
pocket expenses. The Company will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws.
INFORMATION AGENT. D.F. King & Co., Inc. is acting as the Information
Agent for the Company in connection with the Tender Offers and Solicitation.
The Company will pay the Information Agent reasonable and customary
compensation for such services, plus reimbursement for reasonable out-of-
pocket expenses. All inquiries and correspondence addressed to the
Information Agent relating to the Tender Offers and Solicitation should be
directed to the address or telephone number set forth on the back cover of
this Statement.
The Company will reimburse brokers, dealers, commercial banks and trust
companies for customary mailing and handling expenses incurred by them in
forwarding material to their customers. The Company will not pay any fees or
commissions to any broker, dealer or other person (other than the Dealer
Manager) in connection with the solicitation of tenders of Notes or Consents
pursuant to the Tender Offers.
None of the Dealer Manager, the Information Agent or the Depositary
assume any responsibility for the accuracy or completeness of the information
concerning the Company or their respective affiliates contained in this
Statement or for any failure by the Company to disclose events that may have
occurred and may affect the significance or accuracy of such information.
MISCELLANEOUS
Directors, officers and regular employees of the Company (who will not
be specifically compensated for such services) and the Dealer Manager may
contact Holders by mail, telephone, telex, telegram messages, mailgram
messages, datagram messages and personal interviews regarding the Tender
Offers and may request brokers, dealers and other nominees to forward this
Statement and related materials to beneficial owners of Notes.
The Company is not aware of any jurisdiction where the making of the
Tender Offers are not in compliance with the laws of such jurisdiction. If
the Company becomes aware of any jurisdiction where the making of the Tender
Offers or the Solicitation would not be in compliance with such laws, the
Company will make a good faith effort to comply with any such laws or seek to
have such laws declared inapplicable to the Tender Offers or the
Solicitation. If, after such good faith effort, the Company cannot comply
with any such applicable laws, the Tender Offers or Solicitation will not be
made to (nor will tenders be accepted from or on behalf of) the Holders
residing in such jurisdiction.
32
ANNEX A
TEXT OF LYONS INDENTURE PROVISIONS AND PROPOSED AMENDMENTS.
THIS ANNEX SHOWS THE SUBSTANTIVE CHANGES WHICH WILL BE MADE TO THE LYONS
INDENTURE UPON THE EFFECTIVENESS OF THE PROPOSED AMENDMENTS. THIS SCHEDULE
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FORM OF FIRST SUPPLEMENTAL
INDENTURE TO THE LYONS INDENTURE AND TO THE LYONS INDENTURE. CAPITALIZED
TERMS USED BUT NOT DEFINED SHALL HAVE THE MEANINGS ASSIGNED TO THEM IN THE
FIRST SUPPLEMENTAL INDENTURE. HOLDERS MAY REQUEST COPIES OF THE LYONS
INDENTURE AND/OR THE FORM OF FIRST SUPPLEMENTAL INDENTURE FROM THE
INFORMATION AGENT.
TEXT OF COVENANTS OF THE LYONS INDENTURE TO BE DELETED
Pursuant to the Proposed Amendments, the following sections of the LYONs
Indenture (together with references thereto and definitions used exclusively
therein) will be deleted in their entirety, unless otherwise specified. All
references to the Corporation in the following sections of the LYONs
Indenture are to the Company.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. When Corporation May Merge or Transfer Assets. The
Corporation shall not consolidate with or merge into, or convey, transfer or
lease all or substantially all its assets to, another person unless (i) the
resulting, surviving or transferee person (if not the Corporation) shall be
a person organized and existing under the laws of the United States or any
state thereof or the District of Columbia and such entity shall assume by
supplemental indenture all the obligations of the Corporation under the
Securities and this Indenture, (ii) immediately after giving effect to such
transaction, no Default shall have occurred and be continuing and (iii) the
Corporation shall have delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such supplemental indenture comply with this Indenture.
The successor shall be substituted for the Corporation, and
thereafter all obligations of the Corporation under the Securities and this
Indenture shall terminate except for obligations the Corporation may have
under a supplemental indenture pursuant to Section 11.14. In connection with
a lease of assets under this Section 5.01, the predecessor person shall not
be discharged of its obligations under the Securities and this Indenture.
PROPOSED AMENDMENTS TO THE LYONS INDENTURE
Amendments to Article 5, Successor Corporation
(a) From and as of the Operational Time, Section 5.01 of the Indenture,
When Corporation May Merge or Transfer Assets, shall be amended to read in
its entirety as follows:
"[Intentionally Omitted.]"
A-1
ANNEX B
TEXT OF TPI INDENTURE PROVISIONS AND PROPOSED AMENDMENTS.
THIS ANNEX SHOWS THE SUBSTANTIVE CHANGES WHICH WILL BE MADE TO THE TPI
INDENTURE UPON THE EFFECTIVENESS OF THE PROPOSED AMENDMENTS. THIS SCHEDULE
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FORM OF SECOND SUPPLEMENTAL
INDENTURE TO THE TPI INDENTURE AND TO THE TPI INDENTURE. CAPITALIZED TERMS
USED BUT NOT DEFINED SHALL HAVE THE MEANINGS ASSIGNED TO THEM IN THE SECOND
SUPPLEMENTAL INDENTURE. HOLDERS MAY REQUEST COPIES OF THE TPI INDENTURE
AND/OR THE FORM OF SECOND SUPPLEMENTAL INDENTURE FROM THE INFORMATION AGENT.
TEXT OF COVENANTS OF THE TPI INDENTURE TO BE DELETED
Pursuant to the Proposed Amendments, the following sections of the TPI
Indenture (together with references thereto and definitions used exclusively
therein) will be deleted in their entirety, unless otherwise specified. All
references to the Company in the following sections of the TPI Indenture are
to the Company, and all references to the Guarantor in the following sections
of the TPI Indenture are to TPI Restaurants, Inc.
SECTION 601
[Unnumbered first paragraph, and numbered first, second, third, and
fourth paragraphs, to remain]
(5) a default under any bond, debenture, note or other evidence of
Indebtedness for money borrowed by the Company or any of its Significant
Subsidiaries or under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evi-denced any Indebtedness
for money borrowed by the Company or any Significant Subsidiary, whether such
Indebtedness now exists or shall hereafter be created, which default shall
have resulted in the maturity of $5,000,000 or more of such Indebtedness
becoming or being declared due and payable prior to the date on which it
would otherwise have become due and payable, without such acceleration having
been rescinded or annulled or such Indebtedness having been discharged within
a period of 10 days after there shall have been given, by registered or
certified mail, to the Company and the Guarantor by the Trustee or to the
Company and the Guarantor and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities a written notice specifying
such default and requiring the Company to cause such acceleration to be
rescinded, annulled or discharged and stating that such notice is a "Notice
of Default" hereunder; provided, how-ever, that, subject to the provisions of
Sections 701 and 702, the Trustee shall not be deemed to have knowledge of
such default unless either (A) a Responsible Officer of the Trustee shall
have actual knowledge of such default or (B) the Trustee shall have received
written notice thereof from the Company, the Guarantor, from any Holder, from
the holder of any such Indebtedness or from the trustee under any such
mortgage, indenture or other instrument; or
(6) a final judgment which, together with other out-standing final
judgments. entered against the Company and/or any of its Significant
Subsidiaries, exceeds an
B-1
aggregate of $5,000,000 (not covered by valid and collect-ible insurance from
solvent unaffiliated insurers) shall be entered against the Company and/or
any of its Signifi-cant Subsidiaries and within 60 days after entry thereof
such judgment shall not have been satisfied or discharged or execution
thereof stayed pending appeal or, within 60 days after the expiration of any
such stay, such judg-ment shall not have been satisfied or discharged; or
[numbered seventh, eighth, and ninth paragraphs to remain]
SECTION 901.
SECTION 901. Company May Consolidate, Etc., Only on Certain Terms.
----------------------------------------------------
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
proper-ties and assets substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, the Person formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust,
shall be organized and validly existing under the laws of the United States
of America, any State thereof or the Dis-trict of Columbia and shall
expressly assume, by an inden-ture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of (and premium, if any) and interest on
all the Securities and the performance or observance of every other covenant
of this Indenture on the part of the Company to be performed or observed and
shall have provided for conversion rights in accordance with Section 1311;
(2) immediately after giving effect to such transac-tion and treating
any Indebtedness which becomes an Obli-gation of the Company or a Subsidiary
as a result of such transaction as having been incurred by the Company or
such Subsidiary at the time of such transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have hap-pened and be continuing;
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supple-mental indenture comply with
this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with; and
(4) the Guarantor has (i) delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that the Guarantee
remains in full force and effect or (ii) in the case of consolidation or a
merger by the Company with, or conveyance, transfer or lease of the Company's
properties and assets substantially as an entirety to
B-2
the Guarantor, directly assumed as obligor the obligations of the Company
under this Indenture.
SECTION 902
SECTION 902. Successor Substituted for Company.
---------------------------------
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, trans-fer or lease of the
properties and assets of the Company sub-stantially as an entirety in
accordance with Section 901, the successor Person formed by such
consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor Person had been named as
the Company herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under
this Indenture and the Securities.
SECTION 903
SECTION 903. Guarantor May Consolidate, Etc., Only on Certain Terms.
------------------------------------------------------
The Guarantor shall not consolidate with or merge into any other
Person or convey, transfer or lease its proper-ties and assets substantially
as an entirety to any Person, and the Guarantor shall not permit any Person
to consolidate with or merge into the Guarantor or convey, transfer or lease
its properties and assets substantially as an entirety to the Guar-antor,
unless:
(1) in case the Guarantor shall consolidate with or merger into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such con-
solidation or into which the Guarantor is merged or the Person which acquires
by conveyance or transfer or which leases, the properties and assets of the
Guaran-tor substantially as an entirety shall be a corpora-tion, partnership
or trust, organized and validly existing under the laws of the United States
of Amer-ica, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and delivered
by the Guarantor and the Company to the Trustee, in form satisfactory to the
Trustee, the Guarantees endorsed on the Securities and the performance of
every covenant of this Indenture on the part of the Guarantor to be performed
or observed;
(2) immediately after giving effect to such transaction and
treating any Indebtedness which becomes an obligation of the Guarantor or a
Subsidiary as a result of such transaction as having been incurred by the
Guarantor or such Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continu-ing; and
(3) the Guarantor has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such
B-3
transaction, such sup-plemental indenture comply with this Article and that
all conditions precedent herein provided for relating to such transaction
have been complied with.
SECTION 904
SECTION 904. Successor Substituted for Guarantor.
-----------------------------------
Upon any consolidation of the Guarantor with, or merger of the
Guarantor into, any other Person or any convey-ance, transfer or lease of the
properties and assets of the Guarantor substantially as an entirety in
accordance with Sec-tion 903, the successor Person formed by such
consolidation or into which the Guarantor is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Guarantor under this
Indenture with the same effect as if such successor Person had been named as
the Guarantor herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under
this Indenture and the Guarantee.
SECTION 1105.
SECTION 1105. Existence.
---------
Subject to Article Nine, each of the Company and the Guarantor
will do or cause to be done all things necessary to preserve and keep in full
force and effect their respective existence, rights (charter and statutory),
corporate licenses and corporate franchises; provided, however, that neither
the Company nor the Guarantor shall be required to preserve any such right or
franchise if the Board of Directors shall deter-mine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
or the Guarantor, as the case may be, and that the loss thereof is not
disadvan-tageous in any material respect to the Holders.
SECTION 1106.
SECTION 1106. Maintenance of Properties, etc.
------------------------------
The Company will cause all properties used or useful in the conduct
of its business or the business of any Subsid-iary to be maintained and kept
in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals, replace-
ments, betterments and improvements thereof, all as in the judgment of the
Company may be necessary so that the business carried on in connection
therewith may be properly and advanta-geously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company
from discontinuing the operation or maintenance of any of such properties if
such discontinuance is, in the judgment of the Company (i) desirable in the
conduct of its business or the business of any Subsidiary and (ii) not
disadvantageous in any material respect to the Holders.
The Company and the Guarantor shall maintain with financially sound
and reputable insurers such insurance as may be required by law and such
other insurance to such extent and against such hazards and liabilities, and
with such deductible or self-insured retention limitations, as is customarily
main-tained by companies similarly situated.
B-4
SECTION 1107.
SECTION 1107. Payment of Taxes and Other Claims.
---------------------------------
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes,
assessments and governmental charges levied or imposed upon the Company or
any Subsidiary or upon the income, profits or property of the Company or any
Subsidiary, and (2) all law-ful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of the Company
or any Subsidiary; provided, however, that the Company shall not be required
to pay or discharge or cause to be paid or dis-charged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
SECTION 1108.
SECTION 1108. Limitations on Restricted Payments and Investments.
--------------------------------------------------
The Company shall not make, or permit any of its Sub-sidiaries to
make, directly or indirectly, any Restricted Pay-ment or Investment in any
Person, provided that the foregoing provisions shall not be violated by
reason of:
(a) Investments by the Company or any Subsidiary in cash or Cash
Equivalents;
(b) Investments by the Company or any Subsidiary in the Restaurant
Business (including, without limitation, the Enterprises Guaranty and the
Guarantee);
(c) The repurchase, redemption, retirement, defeasance or other
acquisition or retirement for value of Res-taurants Notes or the Securities
by the Company or any Subsidiary, or the making of Consent Payments;
(d) The repurchase, redemption, defeasance or other acquisition or
retirement for value of Common Stock of the Company, Subordinated
Indebtedness of the Company or Sub-ordinated Indebtedness of the Guarantor in
an aggregate amount not to exceed 100% of the gross proceeds received by the
Company or the Guarantor from the issuance subse-quent to the date of this
Indenture (other than to the Company or any Subsidiary) of Common Stock of
the Company, Subordinated Indebtedness of the Company and Subordinated
Indebtedness of the Guarantor;
(e) (i) Investments by the Company or any Subsidiary in Maxcell
and the utilization by Maxcell of such proceeds in connection with the FCC
Permits, and (ii) Investments by the Company or any Subsidiary in TPI
Entertainment, and the utilization by TPI Entertainment of such proceeds in
connection with the business of EEP; provided, however, that the aggregate
amount of Investments made by the Com-pany and its Subsidiaries pursuant to
this clause (e) shall not at any time outstanding exceed $4,000,000 in the
aggregate which amount shall be calculated to equal (x) the sum of (A) cash
or Cash Equivalents in Maxcell or TPI Entertainment on the date of this
Indenture and (B) Investments made pursuant to clause (i) or (ii) above,
minus (y) cash or Cash Equivalents returned to the Company or such
Subsidiary, in the form of a dividend, principal repayment or otherwise, by
Maxcell or TPI Entertainment;
B-5
provided, further, that the expenditure of cash or Cash Equivalents by
Maxcell or TPI Entertainment in connection with the FCC Permits or the
business of EEP will not be deemed to be an Investment pursuant to this
clause(e);
(f) Investments by the Company or any of its Subsid-iaries
received by the Company or any Subsidiary as con-sideration for any sale or
exchange of EEP, TPI Entertain-ment, Maxcell, or any other assets of the
Company or any of its Subsidiaries;
(g) The renewal or replacement of (i) the pledge by TPI
Enterprises of the Capital Stock of TPI Entertainment to secure Indebtedness
of EEP or (ii) the guarantee by TPI Entertainment of Indebtedness of EEP;
(h) Restricted Payments or Investments by the Com-pany or any
Subsidiary pursuant to any employee benefit or savings plan (in existence or
which may be adopted) or any employment or termination arrangement; or
(i) Investments by the Company in U.S. Government Obligations
pursuant to Article Five of this Indenture.
SECTION 1109.
SECTION 1109. Limitation on Payment Restrictions Affecting
Subsidiaries.
------------
The Company shall not, and shall not permit any Sub-sidiary to,
create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Existing Subsidiary to (a)
pay to the Company dividends or make to the Company any other distributions
on such Subsid-iary's Capital Stock or pay, directly or indirectly, to the
Company any Indebtedness owed to the Company, (b) make any loans or advances
to the Company or (c) transfer to the Company any of its property or assets;
except for such encumbrances or restrictions existing under or by reason of
(i) applicable law, (ii) the Bank Credit Agreement or any other encumbrances
or restrictions substantially similar to the Bank Credit Agreement contained
in any replacement or refinancing of the Bank Credit Agreement, this
Indenture, or the Restaurants Notes Indenture, (iii) customary provisions
restricting subletting and assign-ment of any lease governing a leasehold
interest of an Existing Subsidiary, (iv) agreements entered into in the
ordinary course of the Company or any Existing Subsidiary's business
restrict-ing assignment of such agreements, (v) customary restrictions on
dispositions of real property interests, or (vi) any restrictions with
respect to an Existing Subsidiary imposed pursuant to an agreement which has
been entered into for the sale or disposition of any of the capital stock or
assets of such Existing Subsidiary pending the closing of such sale or
disposition; provided the provisions contained in this Section 1109 shall not
be violated if such encumbrance or restriction expressly permits the transfer
of funds by an Existing Subsidiary to the Company sufficient to satisfy when
due all payment Obligations of the Company or the Guarantor in respect of the
Securities including, without limitation, the payment of principal, premium,
if any, interest or the Repur-chase Price or the Redemption Price.
B-6
SECTION 1110.
SECTION 1110. Sale of Assets.
--------------
The Company shall cause the net proceeds received by any Subsidiary
upon the sale, lease, conveyance or other dis-position by such Subsidiary of
all or a portion of the EEP Partnership Interest or the FCC Permits to be
transferred to the Company promptly following such Subsidiary's receipt
thereof, except to the extent that the transfer of all or a portion of such
net proceeds is prohibited by or would require a guarantee of the Company
pursuant to (i) an agreement entered into by the Company or any Subsidiary
prior to the date of this Indenture or (ii) the provisions of any contract or
other agreement relating to such sale, lease, conveyance of other disposition
requiring the Company or any such Subsidiary to establish an escrow to make
other similar provision for a pur-chase price adjustment, indemnity or other
similar payment.
SECTION 1111.
SECTION 1111. Limitation on Transfer of Assets to Subsidiaries.
------------------------------------------------
Neither the Company nor the Guarantor shall trans-fer, whether by
way of sale (including sale and leaseback transactions), lease or other
disposition, any of their respec-tive assets to any Subsidiary (other than
the Guarantor) unless after giving effect to such transfer the PP&E Amount
exceeds $120,000,000.
PROPOSED AMENDMENTS TO THE TPI INDENTURE
Amendments to Article Six
(a) From and as of the Operational Time, Section 6.01 of the Indenture
shall be amended to read in its entirety as follows:
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and
whether it shall be occasioned by the provisions of Article Fourteen
or be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security
when it becomes due and payable, and the continuance of such default
for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security at its Maturity; or
(3) default in the payment of the Repurchase Price (as defined
in Section 1501 in respect of any Security on the Repurchase Date (as
defined in Section 1501) therefor in accordance with the provisions
of Article Fifteen; or
(4) default in the performance, or breach, of any covenant or
agreement of the Company or the Guarantor in this Indenture (other
than a covenant or agreement a default in performance or breach of
which is specifically addressed elsewhere in this Indenture) when
such default or
B-7
breach shall have continued for a period of 60 days after there has
been given, by registered or certified mail, to the Company and the
Guarantor by the Trustee or to the Company and the Guarantor and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(5) "[Intentionally Omitted.]"
(6) "[Intentionally Omitted.]"
(7) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization
or other similar law or (B) a decree or order adjudging the Company
or any Significant Subsidiary a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company or any
Significant Subsidiary under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any
Significant Subsidiary, as the case may be, or of any substantial
part of its property, or ordering the winding up or liquidation of
its affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for
a period of 60 consecutive days; or
(8) the commencement by the Company or any Significant
Subsidiary of a voluntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding, to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree
or order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under any
organization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against the Company or
any Significant Subsidiary, or the filing by the Company or any
Significant Subsidiary of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law,
or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Significant Subsidiary, as the case may be, or
of any substantial part of their property, or the making by the
Company or any Significant Subsidiary of an assignment for the
benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the
taking of corporate action by the Company or any Subsidiary, as the
case may be, in furtherance of such action; or
(9) the Guarantee shall for any reason (other than pursuant to
its terms) cease to be in full force and effect.
(b) From and as of the Operational Time, Section 901 of the Indenture
shall be amended to read in its entirety as follows:
"[Intentionally Omitted.]"
B-8
(c) From and as of the Operational Time, Section 902 of the Indenture
shall be amended to read in its entirety as follows:
"[Intentionally Omitted.]"
(d) From and as of the Operational Time, Section 903 of the Indenture
shall be amended to read in its entirety as follows:
"[Intentionally Omitted.]"
(e) From and as of the Operational Time, Section 904 of the Indenture
shall be amended to read in its entirety as follows:
"[Intentionally Omitted.]"
(f) From and as of the Operational Time, Section 1105 of the Indenture
shall be amended to read in its entirety as follows:
"[Intentionally Omitted.]"
(g) From and as of the Operational Time, Section 1106 of the Indenture
shall be amended to read in its entirety as follows:
"[Intentionally Omitted.]"
(h) From and as of the Operational Time, Section 1107 of the Indenture
shall be amended to read in its entirety as follows:
"[Intentionally Omitted.]"
(i) From and as of the Operational Time, Section 1108 of the Indenture
shall be amended to read in its entirety as follows:
"[Intentionally Omitted.]"
(j) From and as of the Operational Time, Section 1109 of the Indenture
shall be amended to read in its entirety as follows:
"[Intentionally Omitted.]"
(k) From and as of the Operational Time, Section 1110 of the Indenture
shall be amended to read in its entirety as follows:
"[Intentionally Omitted.]"
(l) From and as of the Operational Time, Section 1111 of the Indenture
shall be amended to read in its entirety as follows:
"[Intentionally Omitted.]"
B-9
In order to tender and deliver Consents, a Holder must send or deliver
a properly completed and signed Letter of Transmittal and Consent,
certificates for Notes and any other required documents to the Depositary at
its address set forth below or tender and deliver Consents pursuant to DTC's
Automated Tender Offer Program.
The Depositary for the Tender Offers is:
THE BANK OF NEW YORK
Reorganization Department
101 Barclay Street, Floor 7 East
New York, New York 10286
Attn.: Kin Lau
By Facsimile for Eligible Institutions:
(212) 815-6339
To Confirm by Telephone: (212) 815-3750
Any questions or requests for assistance or for additional copies of
this Statement, the Letters of Transmittal and Consent or related documents
may be directed to the Information Agent at its telephone number set forth
below. A Holder may also contact the Dealer Manager at its telephone number
set forth below or such Holder's broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Tender Offers.
The Information Agent for the Tender Offers is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll-Free: (888) 242-8157
The Dealer Manager for the Tender Offers is:
BANC OF AMERICA SECURITIES LLC
100 North Tryon Street, 7th Floor
Charlotte, North Carolina 28255
Attention: High Yield Special Products
(704) 388-4813 (Collect)
(888) 292-0070 (Toll-Free)
Dates Referenced Herein and Documents Incorporated by Reference
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