Keystone starts exchange offer for its senior notes

Feb 23, 2011

Keystone Automotive Operations Inc., Exeter, Pa., announced Feb. 16 that it will seek to implement its previously announced financial restructuring by launching an exchange offer and consent solicitation with respect to its existing 9-3/4% senior subordinated notes due 2013, and a solicitation of acceptances of a prepackaged plan of reorganization.

As part of the exchange offer, the holders of the senior subordinated notes will be asked to exchange their existing notes in return for their pro rata share of approximately 22% of the new common stock of reorganized Keystone and the ability to purchase, pursuant to a rights offering in an aggregate amount of up to$60 million, their pro rata share of approximately 47.4% of the new common stock. The closing of the exchange offer is conditioned upon, among other things, 98% of the aggregate principal amount of senior subordinated notes being validly tendered and not withdrawn, which percentage may be modified by mutual agreement of the company and certain of the company’s stakeholders.

If the Minimum Tender Condition is not satisfied or another condition to the closing of the exchange offer is not met, the company will seek to implement the restructuring by commencing cases under Chapter 11 of the United States Bankruptcy Code and seeking confirmation of a prepackaged plan of reorganization. As such, in connection with the exchange offer, the company is simultaneously soliciting acceptances of the prepackaged plan as an alternative to the exchange offer.

The Exchange Offer is scheduled to expire at 5 p.m. EST, March 16, 2011, unless extended or earlier terminated by the company with the consent of certain of its stakeholders. Tendered senior subordinated notes may be validly withdrawn at any time before the exchange offer expires.

The new securities have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.