Affinion gets $1.45 billion facility via HPS at Libor plus 775 bps

By Susanna Moon

Chicago, May 12 – Affinion Group, Inc. offered more details of its $1.45 billion credit facility with HPS Investment Partners, LLC in an 8-K filing Friday with the Securities and Exchange Commission.

Interest on the loans will be Libor plus 775 basis points, with a commitment fee of 75 bps.

The new credit facility matures on May 10, 2022.

As announced May 10, the credit agreement consists of a $1.34 billion senior secured term loan and a $110 million senior secured revolving credit facility. The revolver will be reduced to $80 million after one year.

The term loan provides for quarterly amortization payments of 1% for the first two years, stepping up to 2.5% for the third year and to 5% for each year after that, payable quarterly, with the balance payable at maturity.

In addition, the facility requires Affinion to prepay term loans with 100% of cash proceeds of some asset sales and dispositions; of insurance or condemnation events; of extraordinary and non-recurring cash receipts in excess of an amount per receipt; and of debt.

The company also must use 50% of Affinion’s excess cash flow beginning with the fiscal year ending Dec. 31, 2017, dropping to 25% if Affinion’s senior secured leverage ratio is less than or equal to 3.5 times and to 0% if leverage is less than or equal to 2.5 times.

The terms allow Affinion to reduce the revolving loan commitments at any time without premium or penalty, except for Libor breakage costs.

Also, Affinion may terminate the facility.

If the company makes voluntary prepayments of terms loans, it will be required to pay a make-whole premium before the second anniversary of 103% after the second anniversary and at 101% after the third anniversary.

HPS Investment Partners, LLC will act as administrative agent and collateral agent for the lenders and as lead arranger, syndication agent, documentation agent and bookrunner.

Affinion Group previously said it planned to use the proceeds to refinance debt under its credit facility and to redeem all of the outstanding 7½% cash/PIK senior notes due 2018 of Affinion International Holdings Ltd.

Affinion is a Stamford, Conn., provider of marketing loyalty products.

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