Affinion announces plan to offer warrants in exchange for toggle notes

By Angela McDaniels

Tacoma, Wash., April 28 - Affinion Group Holdings, Inc. plans to offer warrants in exchange for a portion of its 13¾%/14½% senior secured PIK/toggle notes due 2018, according to an 8-K filing with the Securities and Exchange Commission.

In connection with the potential exchange offer, the company entered into a support agreement on April 28 with some holders of the notes. They agreed to tender about $57.5 million principal amount of notes in the offer.

Under a warrant holder rights agreement dated Dec. 12, some existing investors have pre-emptive rights to purchase the new warrants. The exchange offer will be for a maximum amount of principal and accrued interest equal to the difference between $100 million minus the aggregate purchase price paid to the investors in a pre-emptive rights offer.

In the exchange offer, eligible noteholders will receive new warrants to purchase a number of shares of class B common stock equal to principal and accrued interest divided by $3.14. The exercise price of the warrants will be $0.01 per share.

The consummation of the exchange offer and the obligations of the holders to tender their notes under the support agreement are subject to the closing of the pre-emptive rights offer.

In addition, Affinion's obligations to complete the exchange offer under the support agreement are subject to conditions that include, among others, the receipt of the consent of the required lenders to amend the definition of "change in control" in Affinion Group, Inc.'s credit agreement and the completion of the pre-emptive rights offer.

Under the support agreement, Affinion agreed to pay some of the holders' attorney's fees, and it may not make any modifications to the terms of the exchange offer without the consent of the holders., other than certain permitted modifications.

The support agreement will automatically terminate if the exchange offer has not closed by June 30, if the exchange offer has not begun at least 20 business days prior to June 30, at any time after May 12 until the commencement of the exchange offer if the exchange offer has not begun and upon the occurrence of any material default or event of default under the notes or other debt of Affinion having a principal amount outstanding of more than $30 million that cannot be cured or waived.

Affinion is a Norwalk, Conn.-based provider of marketing services and loyalty programs.

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