iPayment extends exchange offer for 9˝% notes due 2019 by another day

By Susanna Moon

Chicago, April 4 – iPayment, Inc. again extended the exchange offer for its 9˝% senior secured notes due 2019, this time by one day until 5 p.m. ET on April 7.

The exchange was previously extended from 5 p.m. ET on April 6, March 29 and March 20. Meanwhile, the early tender deadline was extended from 5 p.m. ET on March 15, 11:59 p.m. ET on March 16 and 5 p.m. ET on March 10.

As of March 9, 94.27% of the 9˝% notes had been tendered for exchange, the company earlier reported.

The company said on March 30 that it had once more extended the exchange and also revised the terms of the debt that will be outstanding following completion of the offer.

The deadline for withdrawing tendered notes has expired, as previously noted.

Under the exchange, iPayment is offering for all of the notes a total of $40 million in cash, cash for accrued interest, an additional $1 million in cash for those who tender by the early deadline, 90.5% of a new issue of preferred stock of iPayment Holdings and 90.5% of the common stock of iPayment Holdings.

As announced Feb. 16, the company and parent iPayment Holdings, Inc. are making the exchange offer to implement a comprehensive refinancing of the company.

Holders of 90% of the company’s 9˝% senior secured notes due 2019 have agreed to the exchange offer. These investors also own 57% of the company’s stock.

Existing stockholders will be able to either receive $1.55 per share – increased from $1.31 per share – in cash or alternatively to maintain their ownership, which will be diluted to a total of 9.5% of the company’s stock, and receive their share of 9.5% of the new issue of preferred stock.

Noteholders who participate in the exchange and who also own common stock will be required to waive their right to the cash option for their stock.

As part of the refinancing, iPayment, Inc. expects to enter into one or more new credit agreements. J.P. Morgan will arrange these loans.

The company’s existing credit agreement along with some other debt will be repaid. In addition, the indenture for the 9˝% notes will be amended.

Completion of the exchange is conditional on the arrangement of the new credit facility and the participation of holders of at least 95% of the 9˝% notes.

Settlement was originally expected late in the first quarter or early in the second quarter.

MacKenzie Partners, Inc. (800 322-2885, 212 929-5500 or proxy@mackenziepartners.com) is information agent and exchange agent.

iPayment originally announced a refinancing agreement with its noteholders on Jan. 17 but that was subsequently revised to reduce the cash payment to noteholders by $4 million and increase the equity value of iPayment Holdings by $11 million, to $36 million from $25 million. Originally the cash payment was $42.5 million and the early tender premium was $2.5 million.

iPayment is a Westlake Village, Calif., provider of payment processing solutions.

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