Affinion Group offers to exchange $292.8 million 13¾%/14½% PIK notes

By Susanna Moon

Chicago, May 7 - Affinion Group Holdings, Inc. said it began an offer to exchange its $292.8 million outstanding 13¾%/14½% senior secured pay-in-kind toggle notes due 2018 for series A warrants to purchase shares of its class B common stock.

The purpose of the exchange offer is to reduce Affinion Holdings' outstanding debt, thereby providing it with additional flexibility to execute its strategic initiatives and grow its business, according to a company press release.

Under a warrant holder rights agreement dated Dec. 12, some existing investors have pre-emptive rights to purchase the new warrants.

In the exchange offer, Affinion is offering to exchange an amount of its obligations consisting of principal and accrued interest for the existing notes equal to the difference between $100 million and the aggregate purchase price paid for new warrants issued upon the exercise of pre-emptive rights.

Assuming the pre-emptive rights offer is 100% subscribed, after giving effect to pre-emptive rights waivers by holders, it would result in about $27.1 million of cash proceeds that would reduce the exchange offer cap.

The exchange value for each $1,000 principal amount of notes is series A warrants to purchase 341.4322 shares of Affinion's class B common stock. The number of shares is equal to principal and accrued interest up to but excluding the settlement date, June 9, divided by $3.14.

If settlement occurs after June 9, the number of new warrants to be issued per $1,000 principal amount of notes will be greater but in no case more than the exchange offer cap, the press release noted.

Tendered notes may be withdrawn through 5 p.m. ET on May 20.

The exchange offer will end at 11:59 p.m. ET on June 4.

Under a support agreement, some holders agreed to tender about $57.5 million aggregate principal amount of notes in the exchange offer.

The exchange offer is conditioned on obtaining lender consents to amend the definition of change in control in the senior secured credit facility of Affinion Group, Inc. and completion of the pre-emptive rights offer.

The exchange offer is not subject to any minimum tender condition.

The information and exchange agent is D.F. King & Co., Inc., (800 431-9643, 212 269-5550 dealers and brokers or affinion@dfking.com).

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

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