Stroock & Stroock & Lavan on Behalf of Certain Senior Noteholders of Monitronics International, Inc. Deliver Letter to Company in Response to Tender and Exchange Offers

August 31, 2018

NEW YORK--(BUSINESS WIRE)--Aug 31, 2018--The beneficial holders (the “ Ad Hoc Group ”) of approximately 65% of the outstanding principal amount of the 9.125% Senior Notes due 2020 (the “ Senior Notes ”) issued by Monitronics International, Inc. (the “ Company ”), announced today that, in connection with the Company’s launch of a transaction with respect to the Senior Notes, they have delivered the attached letter to counsel for the Company.

The Ad Hoc Group is advised by Stroock & Stroock & Lavan LLP and Houlihan Lokey, Inc.

August 31, 2018

Kristopher M. Hansen Direct Dial: 212.806.6056 Fax: 212.806.6006 khansen@stroock.com

Mr. Roger Schwartz Latham & Watkins LLP 885 Third Avenue New York, NY 10022-4834

Re: Monitronics International, Inc.

Dear Roger:

I reference (a) the Company’s launch of the tender and exchange offer for the 9.125% Notes due 2020 (the “Notes”) on August 30, 2018 (the “Offer”) and (b) my prior letter to you, dated July 19, 2018, and the terms defined therein (the “July 19 Letter”). As a threshold matter and as you know, the terms of the Offer are unacceptable to the members of the Ad Hoc Group. As you also know, the Ad Hoc Group holds more than sixty-five percent (65%) of the Notes and they will not tender any of their Notes in the Offer, which means it will fail because without Ad Hoc Group participation it will be impossible to satisfy the minimum tender condition or obtain the consents required to amend the indenture.

In the July 19 Letter, I expressed our clients’ frustration with (i) the Company’s refusal to engage in direct negotiations with the Ad Hoc Group after requesting that it be formed and allowing its professionals to conduct diligence and (ii) the Company’s then- apparent intent to launch a tender and exchange offer without ever engaging in a substantive discussion with the members of the Ad Hoc Group. I also noted in the July 19 Letter that any non-negotiated transaction launched by the Company would fail.

Shortly thereafter, I notified you that members of the Ad Hoc Group holding more than 65% of the Notes had executed a cooperation agreement (the “Cooperation Agreement”), pursuant to which no holder of Notes party thereto may, among other things, agree to the terms of, or tender Notes or otherwise participate in, a tender or exchange offer for the Notes that has not been approved by each party to the Cooperation Agreement. The Cooperation Agreement became effective on July 31, 2018 and has now been extended to the later of (i) October 10th, 2018 or (ii) in the event that the expiration date of the Offer (or any modification thereof) is extended or any new tender or exchange offer for the Notes is launched prior to October 10, 2018, five (5) business days after the date thereof.

Shortly after notifying you of the existence of the Cooperation Agreement, the Company entered into non-disclosure agreements (“NDAs”) with members of the Ad Hoc Group and appeared willing to negotiate the terms of a transaction with respect to the Notes. However, several weeks later, I write once again to express the Ad Hoc Group’s frustration with how the Company has handled this recent process and its disappointment that the Company chose to launch a transaction that it knew would fail because the members of the Ad Hoc Group specifically told the Company they would not support it.

Throughout the two-week period while the NDAs were in force, the Company was seemingly unprepared for a realistic negotiation, which only makes its decision to launch the Offer more baffling. As noted in the July 19 Letter (and as disclosed by the Company in its latest 10-Q filing), the Company needs to address the maturity of the Notes in the near term to avoid a potential going concern default under its credit facility. In light of this, it is hard to comprehend why the Company would waste valuable resources to pursue a transaction that it knew would fail, particularly given that, as disclosed in the Company’s recent 8-K filing and the Ad Hoc Group’s press release, the Ad Hoc Group had proposed an alternative transaction that would provide a better outcome for all stakeholders.

It is unfortunate that the Company squandered an opportunity to avoid the expense and delay associated with a failed public process. Nevertheless, the Ad Hoc Group stands ready and willing to pursue a “win-win” transaction for the Company. At a time when the Company is making important and significant progress on key initiatives, the Ad Hoc Group re-affirms its belief in the Company’s future. However, the members of the Ad Hoc Group hope (and the Company’s stakeholders should demand) that the Company’s fiduciaries will conduct themselves in the future in a more realistic and informed manner.

The Ad Hoc Group intends to publicly disclose the contents of this letter.

Best regards,

Kristopher M. Hansen

View source version on businesswire.com:https://www.businesswire.com/news/home/20180831005401/en/


Kristopher M. Hansen, 212-806-6056

180 Maiden Lane, New York, NY 10038



SOURCE: Stroock & Stroock & Lavan LLP

Copyright Business Wire 2018.

PUB: 08/31/2018 01:17 PM/DISC: 08/31/2018 01:17 PM


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