Affinion extends deadline to receive full offer for three note series

By Wendy Van Sickle

Columbus, Ohio, April 17 – Affinion Group Holdings, Inc. extended the deadline for noteholders to receive the total consideration in its private exchange offers for its $16,111,533 of 13¾%/14½% senior secured PIK/toggle notes due 2018, Affinion Group, Inc.’s $475 million of 7 7/8% senior notes due 2018 and Affinion Investments, LLC’s $22,609,200 of 13½% senior subordinated notes due 2018.

All noteholders who participate in the exchange offers through its final expiration at 5 p.m. ET on May 5 will now receive the total consideration offered for the relevant series of notes, according to a press release.

Previously, only noteholders who tendered their notes for exchange by the deadline for the concurrent consent solicitation, 5 p.m. ET on April 14, were to receive the total consideration.

Affinion also announced on Monday that it received sufficient consents to make its proposed amendments to the indentures of two of the three series of notes.

The exception was Affinion Group Holdings’ 13¾%/14½% senior secured PIK/toggle notes, of which $4,567,624, or about 28.4%, of the principal amount of notes were tendered by the consent deadline.

Of Affinion Group’s7 7/8% senior notes, $269,693,000, or about 56.8%, were tendered by the consent deadline, and $12,448,280, or about 55.1% of Affinion Investments’ 13½% senior subordinated notes were tendered by the consent deadline.

Notes could not be tendered without consents being delivered. In each case, approval of the proposed amendments required the consent of holders of a majority of the outstanding principal amount of each series of notes, not including notes held by affiliates of Affinion Holdings, Affinion Group or Affinion Investments.

The amount of Affinion Group 7 7/8% notes tendered by the early deadline also was sufficient to meet the minimum exchange condition of 50.1% of the outstanding principal, the press release noted.

For each series of notes, holders are being offered either (1) senior notes due 2022 issued by Affinion Group plus new warrants to purchase shares of Affinion Holdings or (2) cash.

For each $1,000 principal amount of notes tendered, holders may elect to receive either (1) $1,000 principal amount of new notes and warrants to purchase 3.37 shares or (2) cash. The cash amount is $930 for the 7 7/8% notes, $700 for the PIK toggle notes and $880 for the 13½% notes.

Before Monday’s extension of the deadline to receive the total consideration, for each $1,000 principal amount of notes tendered after the consent time, holders could elect to receive either (1) $990 principal amount of new notes and warrants to purchase 3.34 shares or (2) cash. The cash amount is $920 for the 7 7/8% notes, $690 for the PIK toggle notes and $870 for the 13½% notes.

Holders will also receive accrued interest up to but excluding the settlement date. For holders who elect to receive new notes and warrants in exchange for their notes, this interest will be paid in the form of new notes and new warrants. For holders who elect to receive cash in exchange for their notes, this interest will be paid in cash.

For the first 18 months, Affinion Group may elect to pay interest on the new notes (1) entirely in cash at a rate per year of 12½% or (2) entirely in kind at a rate per year of 14%, provided that interest for the first interest period beginning on the settlement date will be payable entirely in kind.

After 18 months, Affinion Group may elect, or may be required, to pay interest on the new notes (i) entirely in cash at a rate per year of 12½%, (ii) as a combination of cash at a rate per year of 6½% and PIK interest at a rate per year of 7½% or (iii) as PIK interest at a rate per year of (x) 14¾% for any interest payment period ending on or prior to the date that is the 30-month anniversary of the settlement date or (y) 15½% for any interest payment period ending after the date that is the 30-month anniversary of the settlement date.

Consent solicitation details

The companies solicited consents to amendments to reduce from 30 days to three business days the minimum notice period for optional redemptions.

In addition, Affinion Group solicited consents to remove substantially all of the restrictive covenants and some of the default provisions in the indenture governing the 7 7/8% notes.

The company said the purpose of the exchange offers and related consent solicitations is to extend the maturities of the notes from 2018 to 2022, thereby giving Affinion additional flexibility to execute its strategic initiatives and grow its business.

The offer was announced on April 3.

Support agreement

On March 31, a group of noteholders entered into a support agreement under which they agreed to tender their notes in the exchange offers.

The group holds about $237.5 million, or 50%, of the 7 7/8% notes and includes, among others, affiliates or managed funds of Elliott Management Corp. and Franklin Mutual Advisers, LLC.

Also on March 31, affiliates of Elliott Management, Franklin Mutual Quest Fund, affiliates of Empyrean Capital Partners, LP and Metro SPV LLC, an affiliate of ICG Strategic Secondaries Advisors LLC, entered into an investor purchase agreement under which they agreed to purchase a principal amount of new notes and new warrants that would yield enough cash proceeds for Affinion to repurchase any notes tendered for cash consideration in the exchange offers. This is referred to as the initial investment.

If Affinion Holdings, Affinion Group or Affinion Investments exercises its option to redeem any notes not tendered in the exchange offers, under the investor purchase agreement, the company has the option to obligate the investors to purchase a principal amount of new notes and new warrants that would yield enough cash proceeds to redeem any notes not tendered in the exchange offers. This is referred to as the follow-on investment.

Any follow-on investments would be made within 90 days from the consummation of the exchange offers, subject to the company delivering a notice of optional redemption to the noteholders and the tender of at least 90% of the aggregate principal amount of the applicable series of notes in the exchange offers.

The information and exchange agent for the exchange offers is D.F. King & Co., Inc. (800 848-3416, 212 269-5550 or affinion@dfking.com).

Affinion is a Stamford, Conn., provider of marketing loyalty products.

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