NEW YORK, Aug. 20, 2018 (GLOBE NEWSWIRE) -- Stroock & Stroock & Lavan LLP on behalf of the holders (the “Disclosing Noteholders”) of over 65% in principal amount of the 9.125% Senior Notes due 2020 (the “Senior Notes”) issued by Monitronics International, Inc. (the “Company”) are publicly disclosing information to supplement the disclosure made by the Company and its parent entity, Ascent Capital Group, Inc. (“Ascent”), in their respective Form 8-K Reports issued on August 17, 2018 (collectively, the “8-K”). The Disclosing Noteholders are members of an ad hoc group of holders of Senior Notes that is being advised by Stroock & Stroock & Lavan LLP and Houlihan Lokey, Inc.
As stated in the 8-K, the Company proposed to the Disclosing Noteholders an exchange of the Senior Notes into new unsecured notes of the Company along with a tender offer for Senior Notes by Ascent using up to $100 million of Ascent’s cash (as described more fully below) and the Disclosing Noteholders proposed to the Company an exchange of the Senior Notes into new second lien secured notes of the Company along with a repayment of the Company’s term loan of $100 million. The proposal by the Disclosing Noteholders provided that the second lien note exchange would be the preferred alternative and that the Disclosing Noteholders would support an unsecured note exchange only if the second lien note exchange proved unsuccessful. The Company and the Disclosing Noteholders and their respective advisors engaged in negotiations over these proposals between August 2, 2018 and August 17, 2018. To the knowledge of the Disclosing Noteholders, the Company did not present any of the proposals that were discussed to the holders of the Company’s term loans or revolving loans.
The last proposal made by the Company to the Disclosing Noteholders for both the second lien note exchange and the unsecured note exchange included the following elements:
A. Second Lien Note Exchange
- The Company would seek an amendment to its Credit Agreement dated as of March 23, 2012, with Bank of America, N.A., and certain other lenders (the “Credit Agreement”) to allow the Senior Notes to be exchanged into new second lien secured notes (the “Second Lien Notes”). In addition, Ascent would use $100 million in cash to pay down the term loans under the Credit Agreement.
- The Company would offer to exchange any or all of the Senior Notes for Second Lien Notes on a par for par basis (if tendered by a specified date) or at a rate of $950 for every $1,000 tendered (if tendered after the specified date).
- The Second Lien Notes would mature on April 30, 2023 and accrue cash interest at a rate of 6.50% and pay-in-kind interest at a rate of 3.50%.
- The exchange for Second Lien Notes would only become effective upon the participation of holders of 85% in principal amount of the Senior Notes and the receipt of consents to the related Credit Agreement amendment from the requisite lenders under the Credit Agreement.
B. Tender Offer and Unsecured Note Exchange
- Ascent would use $100 million in cash (the “Tender Amount”) to tender for Senior Notes in a modified Dutch Auction process at 75.0 - 87.5% of par value. Certain noteholders would backstop the tender offer at a price of 87.5% of par value.
- The Senior Notes acquired by Ascent in the tender offer would remain outstanding and accrue cash interest at a rate of 7.50% and be guaranteed by the Company’s subsidiaries on a basis subordinated to the New Senior Notes (as defined below).
- The Company would offer to exchange any or all of the Senior Notes not acquired by Ascent in the tender offer for new senior notes (the “New Senior Notes”) on a par for par basis (if tendered into the exchange by a specified date) or at a rate of $950 for every $1,000 tendered (if tendered into the exchange after the specified date).
- Exchanging noteholders would also receive penny warrants to purchase 10% of Ascent’s common stock, with a strike price equal to the greater of (i) 150% of the pre-launch trading price, or (ii) $5.00 per share.
- The New Senior Notes would mature on April 30, 2023 and accrue cash interest at a rate of 7.50% and pay-in-kind interest at a rate of 4.00% and be guaranteed by all restricted subsidiaries guaranteeing the revolving and term loan facilities.
- The tender offer and exchange would only become effective upon participation by Noteholders holding no less than 65% in principal amount of the Senior Notes.
While the Disclosing Noteholders engaged in good faith negotiations with the Company to reach agreement on the terms of the proposed exchange offers, they rejected the Company’s last proposal. The Company and the Disclosing Noteholders subsequently were unable to reach an agreement and, as disclosed in the 8-K, have ceased discussions.
Prior to the discussions with the Company, certain holders of the Senior Notes that collectively hold more than 65% in principal amount of the Senior Notes, including certain of the Disclosing Noteholders, entered into a cooperation agreement, dated July 31, 2018 (the “Cooperation Agreement”), which, among other things, requires the consent of each such noteholder for any such noteholder to agree to the terms of a transaction with the Company relating to a restructuring of the Company’s indebtedness. The Cooperation Agreement currently expires on September 29, 2018.
No assurances can be made that (a) any transaction described herein or other transaction involving the Senior Notes will be implemented or (b) any definitive agreements will be reached between the Company and the Disclosing Noteholders with respect to the Senior Notes.
Contact Person:
Kristopher M. Hansen
STROOCK
180 Maiden Lane, New York, NY 10038
D: 212.806.6056