Nebraska Book Holdings, Inc. announced the commencement of a private offer to exchange up to $125 million in principal amount of 2.0% Convertible Senior PIK Notes due 2026 for any and all outstanding 15.0% Senior Secured Notes due 2026, upon the terms and subject to the conditions set in the company's Offering Memorandum dated March 18, 2016. Settlement of the exchange offer is currently expected to occur in April 2016. If the exchange offer is completed successfully, for each $1.00 of Existing Notes tendered, a holder will receive $1.05 principal amount of New Senior Notes plus an additional amount of principal of New Senior Notes equal to any accrued and unpaid interest due on the Existing Notes, held by the tendering holder to, but not including, the closing date of the exchange offer which, based on a closing date of April 14, 2016, the company estimate at $0.08085 per $1.00 of Existing Notes (any fractional amount of New Senior Notes to be received in the exchange offer will be rounded down to the nearest dollar).

The exchange offer will reduce the company's interest rate on its notes from 15.0% to 2.0%, with interest during the first two years to be paid in kind, and interest afterward to be paid in cash if the company meets specified requirements. Closing of the exchange offer is contingent on holders of 95.0% of the aggregate principal amount of outstanding Existing Notes participating in the exchange offer. As of the date hereof, funds managed by MAST Capital Management, LLC, which hold the largest amount of the Existing Notes, have agreed to tender their notes in the exchange offer.

In addition, subject to holders in excess of the Threshold Percentage agreeing to tender their Existing Notes in the exchange offer, MAST has agreed to lend a subsidiary of the Company sufficient funds to redeem any Existing Notes not tendered in the exchange offer. The exchange offer will expire at 12:00 midnight, New York City time, on April 14, 2016, unless otherwise extended. Tenders of the outstanding Existing Notes must be made before the exchange offer expires and may be withdrawn at any time before the exchange offer expires.

The exchange offer is subject to customary conditions, which the Company may assert or waive.