General Cinema Corp.'s second extension of its tender offer for Harcourt Brace Javanovich bonds expired Friday without a word from either company by late in the day.
Late Friday, General Cinema spokesman Peter Farwell refused to comment on whether the tender offer had gone through, but he said the company would make an announcement today. A Harcourt spokesman had earlier deferred questions concerning the offer to General Cinema.
Paul Owens, president of Berkeley Capital Management, said of the situation, "It's a game of chicken, who can get closest to the edge. If they don't get the bonds, they will sweeten it."
Traders and analysts said the company's bonds were fairly well bid Friday, and it appeared likely the tender offer would go through eventually, if not that day.
Last August, the two companies announced plans for a $1.5 billion revised merger agreement. An earlier $1.4 billion offer fizzled when General Cinema failed to reach accord with bondholders.
Harcourt also reported last August that General Cinema had reached agreement with the publisher's bondholders' committee and that its members had agreed to tender all their securities.
The committee holds a hefty percentage of each class of Harcourt's outstanding debt, a Harcourt release said earlier.
The tender offer, however, hinges on at least 90% of the debt securities in each class being tendered.
Bandholders initially had until Sept. 28 to accept the offer. General Cinema later extended that deadline, first to Oct. 4 and then to Friday. Market players said, however, that while General Cinema had not achieved 90% in all classes, the percentages tendered for all classes ranged from 78% to 91%. One analyst said the fact that General Cinema has gotten so many bonds tendered means bondholders think the offer is fair.
Meanwhile, General Cinema Friday said it plans to redeemm its 5% subordinated exchangeable debentures due 2002 at 102% of their face value, plus accrued interest, at the Nov. 11 redemption date.
General Cinema's sold the offering to European investors in June 1987.
The redemption is unrelated to the Harcourt merger, Mr. Farwell said.
Under the agreement, holders can exchange their debentures before the redemption for ordinary shares of Cadbury Schweppes PLC at a rate of 333 shares for each 1,000-pound sterling note.
Holders who exchange their debentures will not receive accrued interest on the debentures. The exchange right expires Nov. 8.
General Cinema said 33,277,000 pounds steriling of principal amount of the debentures remain outstanding and were exchangeable into 11,081,241 Cadbury Schweppers ordinary shares. Those shares are held in escrow.
Assuming the exchange rights are fully exercised, the transaction will end General Cinema's invesment in Cadbury Schweppers. General Cinema sold 98.6 million shares of Cadbury Schweppes in Oct. 1990 for a pre-tax gain on the investment of $129.3 million before interest and other related carrying costs.
Regarding why the company decided to sell its position in Cadbury Schweppes, Mr. Farwell said, "This just ends it," noting General Cinema got a significant gain from its investment.
Exchange of the debentures will mean another pre-tax gain of approximately $20 million, realized during the fourth quarter of 1991 and the first quarter of fiscal 1992, depending on when the debentures are exchanged, the company said.
Friday's Markets
In the private-placement market Friday, sources said Southdown Inc.'s $100 million high-yield deal was oversubscribed and increased to $125 million. The 10-year subordinated note deal was priced at 14% with slightly over 5% of the company in warrants. The offering, done under Rule 144A, will later be registered with the Securities and Exchange Commission. Rule 144A facilities secondary trading of unregistered securities.
Kidder, Peabody & Co. is serving as agent.
Elsewhere, a U.S. bankruptcy court in New York extended until Nov. 14 the period Ames Department Stores Inc. has to file its own reorganization plan under Chapter 11, Douglas Ewing, an Ames spokesman said.
The company is attempting to arrive at a consensual plan that its banks, bondholders, and unsecured creditos committee will agree to before its filing, Mr. Ewing said.
"It's a big case and its a complex case," he said. The company currently has some $1.7 billion of unsettled liabilities, he said.
Independence Bancorp's settlement of litigation concerning some asset-backed securities should translate into a fourth quarter pre-tax recovery of about $3.5 million, a spokesman said Friday.
The spokesman said confidentiality agreements within the settlement agreement prevented him from disclosing specific terms. He also was unable to say who the litigation was with, but said it involved insurance on the bonds.
The bonds were placed on nonaccrual status in 1987 and have a current value of about $6 million, he said.
The high-yield market over all was up 1/4 in the high end, with distress names either unchanged or off slightly. High-grade corporates were unchanged.
In ratings actions Friday, Duff & Phelps/MCM Investment Research Co. gave an A rating to NCNB Corp.'s $300 millino issue of noncallable 9.125% subordinated notes. They were priced to yield 9.193% to maturity. NCNB's ratings remain on Ratings Watch-Unfavorable, linked to concerns related to the proposed acquisition of C&S/Sovran Corp.
