iPayment holders exchange 94.7% of 9½% notes as part of refinancing

By Susanna Moon

Chicago, April 11 – iPayment, Inc. said investors had tendered for exchange $280,371,408, or 94.7%, of its $296,064,786 of 9½% senior secured notes due 2019.

The exchange offer ended at 5 p.m. ET on April 7.

In exchange, iPayment will pay $142.67 in cash, 932 shares of common stock and 5.97 shares of preferred stock per $1,000 principal amount, according to a company update on Tuesday.

In addition, holders will also receive a cash payment of $30.61 per $1,000 principal amount of accrued interest to but excluding April 11.

Those who tendered before 5 p.m. ET on March 20 will also receive an early tender fee of $3.57 in cash per $1,000 of notes.

As part of the refinancing, the company entered into a first-lien credit facility consisting of a $330 million term loan and a $20 million revolving loan facility and issued $175 million principal amount 10¾% second-lien senior secured notes due 2024.

In connection with the refinancing, the company obtained noteholder approval to amend the notes indenture.

“This comprehensive refinancing represents a critical milestone for iPayment,” OB Rawls IV, the company’s chief executive officer, said in the company press release.

“We are now positioned for short- and long-term growth across all of our sales channels and we are prepared to capitalize on the new opportunities in and around the payments space.”

Added Robert Purcell, chief financial officer, iPayment: “The completion of the exchange offer and refinancing is a tremendous accomplishment and a catalyst for accelerated growth for the company.”

“We are now in a position to make strategic investments in new business partnerships, technology enhancements and infrastructure to drive incremental value and revenues for our organization and our partners,” Purcell said.

Under the exchange, iPayment was 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. held the exchange offer to implement a comprehensive refinancing.

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.

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 9½% notes had been tendered for exchange, the company earlier reported.

Completion of the exchange was conditioned on the new credit facility and the participation of holders of at least 95% of the 9½% 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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