Affinion Group issues warrants for 30.3 million class B shares in exchange for 13¾%/14½% PIK notes

By Jennifer Chiou

New York, June 9 – Affinion Group Holdings, Inc. announced the issue of new warrants to purchase up to about 30.3 million shares of class B stock in the settlement of its offer to exchange its $292.8 million of outstanding 13¾%/14½% senior secured pay-in-kind toggle notes due 2018.

As reported, the company received and accepted tenders for $88.7 million principal amount of the notes.

The series A warrants will expire on Dec. 12, 2023 and are be exercisable upon issue.

The offer ended at 11:59 p.m. ET on June 4.

Under a warrant holder rights agreement dated Dec. 12, some existing investors had pre-emptive rights to purchase the new warrants.

In connection with the company’s pre-emptive rights offer, it issued new warrants to purchase up to about 1.2 million class B shares in exchange for $3.9 million of cash proceeds in the aggregate.

As already stated, the purpose of the exchange offer was to reduce Affinion Holdings’ outstanding debt, thereby providing it with additional flexibility to execute its strategic initiatives and grow its business, according to a company press release.

The $3.9 million aggregate purchase price paid in connection to new warrants issued under the pre-emptive rights offer resulted in an exchange offer cap of $96.1 million.

With a settlement date of June 9, for each $1,000 principal amount of tendered notes, participating results received new warrants to purchase 341.1757 shares of class B stock as consideration in the exchange.

As a result, upon the completion of both the exchange offer and the pre-emptive rights offer, Affinion will issue new warrants to purchase up to 31.5 million class B shares in the aggregate.

Offer background

Affinion was offering to exchange an amount of its obligations consisting of principal and accrued interest for the existing notes equal to the difference between $100 million and the aggregate purchase price paid for new warrants issued upon the exercise of pre-emptive rights.

If the pre-emptive rights offer had been 100% subscribed, after giving effect to pre-emptive rights waivers by holders, it would have resulted in about $27.1 million of cash proceeds that would reduce the exchange offer cap.

Under a support agreement, some holders had agreed to tender about $57.5 million aggregate principal amount of notes in the exchange offer.

The exchange offer was conditioned on obtaining lender consents to amend the definition of change in control in the senior secured credit facility of Affinion Group, Inc. and completion of the pre-emptive rights offer.

The exchange offer was not subject to any minimum tender condition.

The information and exchange agent was D.F. King & Co., Inc., (800 431-9643, 212 269-5550 dealers and brokers or affinion@dfking.com).

Affinion is a Norwalk, Conn.-based provider of marketing services and loyalty programs. It began the offer on May 7.

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