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Duane Reade Holdings, Inc. Amends Terms and Extends Deadlines for Previously Announced Cash Tender Offers for Senior Secured Floating Rate Notes and Senior Subordinated Notes

NEW YORK, July 24 /PRNewswire/ -- Duane Reade Holdings, Inc. announced today that its wholly-owned subsidiaries, Duane Reade Inc. and Duane Reade (collectively, the "Issuers"), have amended the terms of their previously announced offers to purchase for cash (i) their Senior Secured Floating Rate Notes due 2010 (the "Floating Rate Notes") (the "FRN Offer") and (ii) their 9.75% Senior Subordinated Notes due 2011 (the "Subordinated Notes" and, together with the Floating Rate Notes, the "Notes") (the "Subordinated Notes Offer" and, together with the FRN Offer, the "Offers"), and solicitations of consents for proposed amendments to the related indentures (the "Solicitations of Consents"). The Issuers have distributed an Amended and Restated Offer to Purchase and Solicitation of Consents, dated as of the date hereof (the "Amended and Restated Offer to Purchase").

The Amended and Restated Offer to Purchase reflects the following principal changes to the Offers and Solicitations of Consents:

  • removal of the minimum tender and consent conditions for the FRN Offer;

  • inclusion of an additional condition to the Offers and Solicitations of Consents regarding the execution and delivery of an amendment (the "Credit Agreement Amendment") to the Issuers' asset-based revolving loan facility (to, among other things, permit the issuance of new senior secured notes in a new offering (the "New Notes Offering"));

  • reduction of the amount of the Subordinated Notes sought in the Subordinated Notes Offer to $146,250,000, with any tenders in excess of such amount being subject to proration;

  • reduction of the minimum tender condition for the Subordinated Notes Offer from 85% to 60%;

  • reduction of the tender consideration per $1,000 principal amount of the Subordinated Notes from $845 to $835 and an increase in the consent payment for the Subordinated Notes from $30 to $40; and

  • extension of the consent payment deadline for each of the Solicitations of Consents to July 30, 2009 and the expiration times for the Offers to August 6, 2009 and other corresponding changes to the deadlines related to the Offers and Solicitations of Consents.

The foregoing is only summary in nature and is qualified in its entirety by reference to the text of the Amended and Restated Offer to Purchase, which noteholders are encouraged to read in its entirety.

The Offers and Solicitations of Consents are conditioned upon, among other things, (i) the funding of the $125 million preferred equity investment by entities associated with Oak Hill Capital Partners, L.P. (the "Equity Investment"); (ii) the receipt of sufficient proceeds from the New Notes Offering and the Equity Investment to pay for all Notes and related consents accepted in the Offers; (iii) at least 60% of the outstanding principal amount of the Subordinated Notes having been validly tendered (and not validly withdrawn) in the Subordinated Notes Offer; (iv) receipt of requisite consents to the proposed amendments to the Subordinated Notes indenture and execution of the applicable supplemental indenture; (v) the execution and delivery of the Credit Agreement Amendment; and (vi) certain other conditions as specified in the Amended and Restated Offer to Purchase. In addition, the Equity Investment and the New Notes Offering are conditioned on the successful completion of each other and other conditions precedent specified in the Amended and Restated Offer to Purchase.

As of 5:00 p.m., New York City time, July 24, 2009, $99,007,000 aggregate principal amount of the Floating Rate Notes, representing approximately 47.15% of the outstanding Floating Rate Notes, and $67,829,000 aggregate principal amount of the Subordinated Notes, representing approximately 34.78% of the outstanding Subordinated Notes, had been validly tendered and not validly withdrawn.

This press release is neither an offer to purchase, nor a solicitation for acceptance of the offer. The Issuers are making the offers only by, and pursuant to the terms of, the Amended and Restated Offer to Purchase and the related Amended and Restated Letter of Transmittal. In addition, this press release does not constitute an offer to sell or a solicitation of offers to purchase any securities of the Issuers.

The complete terms and conditions of the Offers are set forth in the Amended and Restated Offer to Purchase and the Amended and Restated Letter of Transmittal, copies of which are available from the Information Agent for the Offers and Solicitations of Consents, Global Bondholder Services Corporation, at (866) 470-3800 (US toll-free) and (212) 430-3774 (collect).

Goldman, Sachs & Co. and Banc of America Securities LLC are the Dealer Managers and Solicitation Agents for the Offers. Questions regarding the Offers may be directed to Goldman, Sachs & Co., Liability Management Group at (800) 828-3182 (toll-free) and (212) 357-4692 (collect) or to Banc of America Securities LLC, Debt Advisory Services at (888) 292-0070 (toll-free) or (980) 388-9217 (collect).

About Duane Reade

Founded in 1960, Duane Reade is the largest drug store chain in New York City, offering a wide variety of prescription and over-the-counter drugs, health and beauty care items, cosmetics, greeting cards, convenience foods and photofinishing. As of June 27, 2009, Duane Reade operated 253 stores.

The statements in this release contain forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. These forward-looking statements relate to future events or our future financial performance with respect to our financial condition, results of operations, business plans and strategies, operating efficiencies or synergies, competitive positions, growth opportunities for existing products such as private label merchandise, plans and objectives of management, capital expenditures, growth and maturation of our stores and other matters. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. Those risks include, among other things, the ability of the Issuers to complete the financing transactions (including the Equity Investment and the New Notes Offering) necessary to consummate the Offers, the national economic climate, economic conditions and employment levels in the New York greater metropolitan area, the strength of the economy in general, the competitive environment in the drug store industry in general and in the New York metropolitan area, the ability to open and operate new stores, the continued efforts by payers and government agencies to reduce prescription reimbursement rates and prescription drug benefits, changes in federal and state laws and regulations, including the potential impact of changes in regulations surrounding the importation of pharmaceuticals from foreign countries and changes in laws governing minimum wage requirements, changes in the Issuers' operating strategy, capital expenditure plans or development plans, the Issuers' ability to successfully execute its business plan, the Issuers' ability to attract, hire and retain qualified pharmacy and other personnel, the Issuers' significant indebtedness, labor disturbances, the continued impact of, or new occurrences of, terrorist attacks in the New York greater metropolitan area and any actions that may be taken in anticipation or response, demographic changes, the Issuers' ability to limit fraud and inventory shrink, the results of the Issuers' legal proceedings and recalls of pharmaceutical products due to health concerns or other reasons. Those and other risks are more fully described in Duane Reade Holdings, Inc.'s reports filed with the SEC from time to time, including its annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Except to the extent otherwise required by federal securities laws, the Issuers do not undertake to publicly update or revise any forward-looking statements.

SOURCE Duane Reade Holdings, Inc.
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