Market Overview

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

Share:

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 Comments and Join the Discussion!