Affinion offers to exchange 12½%/PIK step-up to 15½% notes for stock

By Wendy Van Sickle

Columbus, Ohio, March 4 – Affinion Group Holdings, Inc. and Affinion Group, Inc. began an offer to exchange all of Affinion Group, Inc.’s $681,548,667 of senior cash 12½%/PIK step-up to 15½% notes due 2022 for shares of Affinion Holdings' new class M common stock, according to a news release.

The exchange shares will be converted immediately following consummation of the exchange offer into shares of Affinion Holdings as a result of a merger with one of Affinion Holdings' wholly-owned subsidiaries.

Affinion Group commenced a consent solicitation in connection with the exchange offer to solicit consents to some amendments to the indenture governing the existing notes to eliminate substantially all of the restrictive covenants, among other changes, and Affinion Group commenced a rights offering giving eligible holders of existing notes the right to purchase at par up to $288 million principal amount of 18% senior PIK notes due 2024 of Affinion Group.

Holders who tender by the consent time, 5 p.m. ET on March 15, will receive per $1,000 principal amount of existing notes, 14.672467 shares of Affinion Group Holdings, Inc. class M common stock and the right to participate in the rights offering.

Holders who tender after the consent deadline will receive 14.672467 shares of Affinion Group Holdings, Inc.'s class M common stock.

The exchange offer and consent solicitation are scheduled to expire at 5 p.m. ET on April 5.

The deadline to participate in the rights offering will be 5 p.m. ET on the fifth business day following the consent time.

The consummation of the exchange offer is conditioned upon the receipt of the requisite consents to approve the proposed amendments.

Holders tendering existing notes in the exchange offer must also deliver consents to the proposed amendments. Approval of the proposed amendments requires the consent of holders of at least a majority of the outstanding principal amount of the existing notes.

On March 4, Affinion Holdings and Affinion Group entered into an amended and restated support agreement with holders of about $647 million, or 95%, of the existing notes, under which those holders agreed to participate in the exchange offer.

The company said it expects holders of at least 3% of the other existing notes will also participate in the exchange offer. Total participation is expected to be sufficient to meet the minimum condition.

Also on March 4, certain of the consenting noteholders entered into an amended and restated investor purchase agreement with Affinion Holdings and Affinion Group under which they agreed to purchase for up to $300 million in cash any new notes that are unpurchased in the rights offerings.

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

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