iPayment breaches leverage ratio on 15%/15% notes, triggers PIK hike

By Susanna Moon

Chicago, Nov. 17 – iPayment Holdings, Inc. and iPayment, Inc. will be required to pay 200 basis points additional pay-in-kind interest due Nov. 15 on the 15%/15% notes after breaching a leverage ratio requirement, according to a 10-Q filing with the Securities and Exchange Commission.

The notes also include a leverage ratio test of 7.25 times as of the most recent quarter-end prior to an interest payment date. If iPayment Holdings' leverage ratio exceeds 7.25 times, the interest rate will be retroactively increased by 200 bps in the form of PIK interest.

For the quarter ended Sept. 30, iPayment Holdings' leverage ratio was 8.8 times as of the most recent quarter end prior to the subsequent interest payment date, the filing noted.

iPayment, Inc. is the operating company, and iPayment Holdings is its direct parent.

The carrying value of the 15%/15% notes, net of discount of $600,000 was $131.7 million as of Sept. 30, and the fair value was estimated to be about $43.7 million, considering executed trades occurring around Sept. 30, the filing noted.

The 15%/15% notes were issued May 6, 2011. For any interest period through May 15, 2015, Holdings may elect to pay interest on the notes entirely in cash or pay interest on 50% of the outstanding principal amount in cash interest and on half by increasing the par amount or by issuing additional notes.

iPayment is a New York-based provider of credit and debit card payment processing services to small merchants.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.