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PROSPECTUS SUPPLEMENT FILED PURSUANT TO RULE 424(B)(3)
DATED JULY 14, 1997
TO PROSPECTUS DATED MARCH 4, 1997 REGISTRATION NO. 333-22705
THOUSAND TRAILS, INC.
419,612 SHARES OF COMMON STOCK
This Prospectus Supplement (this "Supplement") relates to (i) the purchase by
Thousand Trails, Inc., a Delaware corporation (the "Company"), of $13.4 million
principal amount of its Senior Subordinated Pay-In-Kind Notes Due 2003 ("PIK
Notes"), tendered to it in its Dutch auction tender offer ("Offer") that expired
on June 18, 1997, and (ii) the funding of the Offer through an amendment to the
Company's loan and security agreement (the "Loan Agreement") with Foothill
Capital Corporation ("Foothill"). This Supplement should be read in conjunction
with the Prospectus dated March 4, 1997 (the "Prospectus"), to be delivered with
this Supplement. All capitalized terms used but not defined in this Supplement
shall have the meanings given them in the Prospectus.
PURCHASE OF PIK NOTES
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Pursuant to the Offer, which commenced on May 20, 1997, a registered holder
of PIK Notes could tender its PIK Notes at a range of $800 per $1,000 of
principal amount to $900 per $1,000 of principal amount, plus a percentage of
accrued interest equal to the percentage of principal at which such PIK Notes
were tendered. A total of $32.5 million principal amount of PIK Notes were
tendered in the Offer. Of these, on June 25, 1997, the Company purchased $13.4
million principal amount, with tenders at $900 per $1,000 principal amount being
accepted on a pro rata basis. The Company's average purchase price for the PIK
Notes purchased was $897 per $1000 principal amount. The purchase resulted in
an expenditure of $12 million for principal, the maximum amount offered in the
Offer, plus $640,000 for accrued interest. Immediately after the purchase,
$29.2 million aggregate principal amount of PIK Notes remained outstanding. To
purchase the PIK Notes, the Company borrowed $12,640,000 under the Loan
Agreement. Immediately after the purchase, $13,179,142 principal amount was
outstanding under the Loan Agreement.
LOAN AGREEMENT AMENDMENT
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In order to permit the Company to make the Offer, the Company and Foothill
entered into an amendment to the Loan Agreement. In addition to permitting the
purchases in the Offer, the amendment, among other things, decreased the maximum
availability under the revolving portion of the Loan Agreement from
approximately $23 million to $20 million and decreased the interest rate payable
thereunder from prime plus 2 3/4% per annum to prime plus 1 1/2% per annum.
Certain other fees were also reduced or eliminated; however, an additional one-
time fee of 3/4 of 1% of the amount funded to purchase principal of the PIK
Notes ($90,000) was required, which has been paid. The term of the Loan
Agreement continues to expire on July 16, 1999, and the indebtedness thereunder
continues to be secured by substantially all of the assets of the Company and
its subsidiaries other than certain excluded assets.
