SALT LAKE CITY, March 27, 2019 (GLOBE NEWSWIRE) -- Sorenson Communications, LLC (the “Borrower”), Sorenson Holdings, LLC (“HoldCo”) and Sorenson Finance Corp. (together with HoldCo, the “Issuers,” and the Issuers together with the Borrower, the “Company”) announced today that they are privately inviting the holders (“Holders”) of the Issuers’ 13.0% Senior Unsecured PIK Toggle Notes due 2021 (the “Existing Notes”) to exchange their Existing Notes for cash, term loans under the Borrower’s new second lien term loan credit facility (the “New Second Lien Term Loans”) or a combination thereof (the “Invitation”). The Company is making the Invitation and related solicitation of consents described below (the “Consent Solicitation”) upon the terms and conditions set forth in a confidential offer to purchase, information memorandum and consent solicitation statement dated March 27, 2019 (the “Information Memorandum”) and a related note delivery letter and consent. The Invitation and Consent Solicitation are open to all holders of the Existing Notes. Holders participating in the Invitation prior to 5:00 p.m., New York City time, on April 9, 2019 (such date and time, as the same may be extended, the “Early Participation Time”) may elect a preferred form of consideration between either cash (“Cash Consideration”) or New Second Lien Term Loans (“Loan Consideration”) in exchange for validly delivered Existing Notes (each, a “Delivery”) which are accepted by the Company in the Invitation.
In conjunction with the Invitation, and upon the terms and conditions set forth in the Information Memorandum, the Issuers are soliciting consents (“Consents”) from Holders of the Existing Notes to certain proposed amendments (the “Proposed Amendments”) to the indenture governing the Existing Notes, dated as of April 30, 2014, as supplemented as of August 15, 2014, November 10, 2014, July 8, 2016 and December 15, 2016 (as so supplemented, the “Indenture”), which will become effective with respect to the Indenture if Consents by Holders representing at least a majority in aggregate principal amount of the then outstanding Existing Notes are received to adopt the Proposed Amendments (the “Requisite Consents”). The Proposed Amendments would eliminate substantially all of the restrictive covenants and certain events of default currently in the Indenture. By making a Delivery before the Early Participation Time, a Holder is deemed to have delivered its Consent to the Proposed Amendments with respect to its Existing Notes being delivered. Holders may not make Deliveries before the Early Participation Time without also delivering Consents and may not deliver Consents before the Early Participation Time without also making Deliveries.
A summary of the Invitation is outlined below:
| Existing Notes to be Delivered | CUSIPs / ISINs | Outstanding Aggregate Principal Amount | Total Exchange Consideration represented by delivery of $1,000 Principal Amount of Existing Notes by Early Participation Time(1) | Exchange Consideration represented by delivery of $1,000 Principal Amount of Existing Notes after Early Participation Time and by Expiration Time(1) | ||||||
| 13.0% Senior Unsecured PIK Toggle Notes due 2021 | CUSIP Nos. 83583T AA5, U8358L AA9 ISIN Nos. US83583TAA51, USU8358LAA99 | $98,862,326 | $1,000 consisting of cash, aggregate principal amount of New Second Lien Term Loans or a combination thereof.(2) | $970 aggregate principal amount of New Second Lien Term Loans. | ||||||
(1) Accrued and unpaid interest on the Existing Notes included in Deliveries accepted in the Invitation up to, but not including, the Settlement Date (as defined below) will be paid in cash in addition to the Total Exchange Consideration or Exchange Consideration (each as defined below).
(2) The form of consideration is subject to the Holders’ election of preferred form of consideration and the proration and allocation mechanics described in the Information Memorandum.
Certain Holders of Existing Notes holding approximately $59.4 million aggregate principal amount of Existing Notes (the “Pre-Launch Committed Holders”) have agreed to participate in the Invitation and Consent Solicitation prior to the Early Participation Time with respect to all Existing Notes held by them, subject to certain conditions. Assuming all of the Pre-Launch Committed Holders participate in the Invitation and Consent Solicitation prior to the Early Participation Time, the Company will receive the Requisite Consents for the Proposed Amendments. However, receipt of the Requisite Consents in the Consent Solicitation is not a condition to the Invitation. Certain of the Pre-Launch Committed Holders that are affiliates of certain equity holders of the Company and that hold approximately $29.5 million aggregate principal amount of Existing Notes have also agreed to elect Loan Consideration as their preferred form of consideration.
The New Second Lien Term Loans will be made pursuant to a second lien term loan credit agreement (the “New Second Lien Credit Agreement”) to be entered into by the Borrower, the Borrower’s direct parent company SCI Holdings, LLC (“SCI”), the participating Holders and other lenders party thereto and Cortland Capital Market Services LLC, as administrative agent and collateral agent (in such capacities, the “Administrative Agent” and the “Collateral Agent,” as applicable). The New Second Lien Term Loans will have a maturity date of the sixth anniversary of the Settlement Date (as defined below) and will bear interest at a floating rate based on LIBOR plus 11.50%. The New Second Lien Term Loans will be guaranteed by SCI and by certain of SCI’s present and future domestic subsidiaries and secured on a second lien basis, subject to certain permitted liens, by a second-priority interest in the collateral securing the Borrower’s new first lien credit facilities (the “New First Lien Facilities”), which the Borrower expects to enter into on or about the Settlement Date. On March 15, 2019, the Borrower priced and allocated the New First Lien Facilities, which consist of a $700 million term loan credit facility scheduled to mature in April 2024 and a $25 million revolving credit facility scheduled to mature in January 2024.
Subject to the terms and conditions set forth in the Information Memorandum, the Invitation will expire at 5:00 p.m., New York City time, on April 24, 2019, unless extended or earlier terminated by the Company (such date and time, as the same may be extended, the “Expiration Time”).
Holders of Existing Notes who validly make and do not validly rescind their Deliveries at or prior to the Early Participation Time (each an “Early Participant”) will be eligible for the Total Exchange Consideration (as defined below) to be paid on or about April 29, 2019 (the “Settlement Date”).
The form of the “Total Exchange Consideration” for each $1,000 aggregate principal amount of Existing Notes surrendered via a Delivery will be as follows: $1,000 of Cash Consideration, $1,000 of aggregate principal amount of New Second Lien Term Loans or a combination thereof, subject to proration and the other terms and conditions of the Invitation. The total amount of Cash Consideration (the “Cash Pool”) available is $25 million; provided that if the Company receives less than $25 million aggregate principal amount of Existing Notes in Deliveries prior to the Early Participation Time (regardless of whether Early Participants elect Cash Consideration or Loan Consideration as their preferred form of consideration), then the amount of the Cash Pool will be the aggregate principal amount of Existing Notes that the Company receives in Deliveries prior to the Early Participation Time. If Holders electing Cash Consideration as their preferred form of consideration make Deliveries prior to the Early Participation Time of more than $25 million aggregate principal amount of Existing Notes, such Holders would receive a pro rata portion of the Cash Pool and the remainder of their consideration in the form of New Second Lien Term Loans, and Holders electing Loan Consideration as their preferred form of consideration prior to the Early Participation Time would receive New Second Lien Term Loans. If Holders electing Cash Consideration as their preferred form of consideration make Deliveries prior to the Early Participation Time of less than $25 million aggregate principal amount of Existing Notes, such Holders would receive cash, and Holders electing Loan Consideration as their preferred form of consideration that make Deliveries prior to the Early Participation Time would receive a pro rata portion of the remainder of the Cash Pool and the balance of their consideration in the form of New Second Lien Term Loans.
Holders who validly make their Deliveries after the Early Participation Time and prior to the Expiration Time shall be entitled to the “Exchange Consideration” on or about the Settlement Date. The “Exchange Consideration” will consist of $970 aggregate principal amount of New Second Lien Term Loans for every $1,000 aggregate principal amount of Existing Notes delivered in connection with such Delivery. Holders who are not Early Participants will not receive the Cash Consideration. If the Early Participation Time is extended, participants in the Invitation prior to the extended Early Participation Time will be eligible to receive the Total Exchange Consideration and may elect their preferred form of consideration during that extended period.
All accrued and unpaid interest on Existing Notes exchanged in the Invitation from the last interest payment date up to, but not including, the Settlement Date, will be paid in cash on the Settlement Date. Interest on the New Second Lien Term Loans will accrue from the Settlement Date. Under the New Second Lien Credit Agreement, all interest payments will be capitalized as an addition to principal (“Capitalized Interest”) for at least the first five years after the Settlement Date.
Based on the terms of the New First Lien Facilities, the Company expects that all accrued and unpaid interest on the Existing Notes that remain outstanding following the Settlement Date, including accrued and unpaid interest up to and including the Settlement Date and all future interest prior to maturity, will be paid in the form of Capitalized Interest (i.e., PIK Notes or PIK Interest as such terms are defined in the Indenture).
Deliveries validly made before the Early Participation Time may be rescinded, and the related Consents therefore revoked, at any time prior to 5:00 p.m., New York City time, on April 9, 2019, unless extended (the “Withdrawal Deadline”). Deliveries validly made before the Early Participation Time may not be rescinded, and the related Consents may not be revoked, after the Withdrawal Deadline, subject to applicable law. Deliveries validly made after the Withdrawal Deadline and before the Expiration Time may not be rescinded at any time, subject to applicable law. The Company may extend the Early Participation Time without extending the Withdrawal Deadline, subject to applicable law.
In addition, certain affiliates of certain equity holders of the Company that hold approximately $99.6 million of 9% Senior Secured Second Lien PIK Toggle Notes due 2020 issued by the Borrower (the “Existing Second Lien Notes”) have agreed to privately exchange their Existing Second Lien Notes for New Second Lien Term Loans (the “Second Lien Notes Private Exchange”), subject to customary closing conditions, and certain affiliates of certain equity holders of the Company are expected to fund approximately $31.9 million of commitments for New Second Lien Term Loans with cash (the “New Second Lien Term Loan Cash Commitment”).
The Invitation is conditioned upon, among other things, (i) entry into the credit agreement related to the New First Lien Facilities, (ii) entry into the New Second Lien Credit Agreement, (iii) consummation of the Second Lien Notes Private Exchange, (iv) participation of the Pre-Launch Committed Holders in the Invitation and Consent Solicitation, (v) the funding of the New Second Lien Term Loan Cash Commitment, (vi) definitive documentation for the credit agreement related to the New First Lien Facilities and the New Second Lien Credit Agreement having been agreed to by all parties thereto and (vii) the satisfaction or waiver of certain other conditions. The Company reserves the right to waive or modify, in whole or in part, any and all conditions to the Invitation and to otherwise amend the Invitation, subject to applicable law. The Company also has the right to terminate the Invitation at any time and for any reason, subject to applicable law. Further details about the terms and conditions of the Invitation and Consent Solicitation are set forth in the Information Memorandum.
The Borrower expects to repay its existing credit facility on the Settlement Date. The Borrower also expects to redeem its outstanding Existing Second Lien Notes (other than the Existing Second Lien Notes that will be exchanged in the Second Lien Notes Private Exchange), on April 30, 2019 at a price of 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, conditioned on the receipt of sufficient net cash proceeds from the refinancing transactions described above or from other refinancing transactions.
The Information Memorandum contains certain important information that should be read before any decision is made with respect to the Invitation. In particular, see “Risk Factors” in the Information Memorandum, including the information incorporated by reference therein. This announcement should be read in conjunction with the Information Memorandum.
General
Questions and requests for assistance, for copies of the credit agreement governing the New Second Lien Term Loan or for additional copies of the Invitation and Consent Solicitation documents may be directed to the Information Agent at its telephone number and email address listed below.
The Company has retained Epiq to act as Information Agent and Delivery Agent in connection with the Invitation and Consent Solicitation, and holders can contact them at (646) 282-2500 or toll free at (866) 897-6433 (ask for the Solicitation Group) or by email at tabulation@epiqglobal.com with a reference to “Sorenson” in the subject line.
The Information Memorandum and the other documents relating to the Invitation and Consent Solicitation are expected to be distributed to Holders beginning today. Holders are urged to read the Information Memorandum and the other materials carefully when they become available.
This release is for informational purposes only and is neither an offer to buy or sell nor a solicitation of an offer to buy or sell any securities of the Company or any of its subsidiaries. The Invitation and Consent Solicitation are only being made pursuant to the Information Memorandum and related documents.
None of the Administrative Agent and Collateral Agent, the Issuers, the Borrower, the guarantors, the Information Agent and Delivery Agent or any of their respective affiliates makes any recommendation in connection with the Invitation as to whether or not any Holder of Existing Notes should exchange or refrain from exchanging their Existing Notes, and no person has been authorized by any of them to make such a recommendation. Accordingly, you must make your own determination as to whether to exchange your Existing Notes and, if so, the aggregate principal amount of Existing Notes to exchange. You should read the Information Memorandum and consult with your financial, legal and tax advisors to make that decision.
Sorenson Communications, LLC
Sorenson Communications, LLC (www.sorenson.com) is a provider of industry-leading communications products and services for the Deaf and hard-of-hearing. The Company’s offerings include SVRS®, the highest-quality video interpreting service; the ntouch® VP and the ntouch VP2 videophones, designed especially for use by Deaf individuals; ntouch PC, software that connects users to SVRS by using a PC and webcam; ntouch for Mac®, software that connects users to SVRS by using an Apple® computer; and ntouch Mobile, an application empowering SVRS communication via tablet and mobile devices. The Company and its subsidiaries and affiliates are unrelated to, and unaffiliated with, Sorenson Media, Inc.
CaptionCall, LLC
CaptionCall, LLC (www.captioncall.com) is another innovative solution from Sorenson Holdings, the worldwide leader in telecommunication relay services. The Company has been offering technology and services for assistive communications since 1995. CaptionCall is a revolutionary phone for anyone experiencing hearing loss that keeps them from using the phone effectively. CaptionCall offers amplification and superb sound quality while displaying smooth-scrolling captions of what callers say on a large, easy-to-read screen. CaptionCall helps people with hearing loss stay socially connected for a longer, happier, healthier life.
Additional Information
The statements included in this release may constitute “forward-looking statements” within the meaning of U.S. federal securities laws. In addition to the assumptions specifically mentioned in the above paragraphs, there are a number of other factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, the Company’s ability to consummate the Invitation on the terms described in this release or at all, the Company’s substantial debt and lease obligations, Video Relay Service and IP Captioned Telephone Service rates, future regulatory actions by the Federal Communications Commission, pending patent litigation and other factors detailed in risk factors and elsewhere in the Information Memorandum, including risk factors incorporated by reference therein. Should one or more of these risks or uncertainties materialize or the consequences of such a development worsen, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. The Company disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise, except as required by law.
For further information, please contact:
Ann Bardsley
Director of Public Relations
Sorenson Holdings, LLC
801-287-9897
abardsley@sorenson.com