Affinion offers to swap out two series with new 13¾%/14½% PIK notes

By Susanna Moon

Chicago, Nov. 7 - Affinion Group Holdings, Inc. said it began an exchange offer for its $325 million of outstanding 11 5/8% senior notes due 2015.

In addition, Affinion Investments, LLC, a wholly owned subsidiary of Affinion Group, Inc., began an exchange offer for $355.5 million of outstanding 11½% senior subordinated notes due 2015, according to a press release by the companies and an 8-K filing with the Securities and Exchange Commission.

The total exchange value for each $1,000 principal amount of 11 5/8% notes tendered by 5 p.m. on Nov. 21, the early tender date, will be $1,000 of Affinion Group's 13¾%/14½% senior secured pay-in-kind toggle notes due 2018, series A warrants for 46.1069 shares and series B warrants for 239.8612 shares.

For 11 5/8% notes tendered after the early deadline, the exchange value will be $950 of toggle notes, series A warrants for 46.1069 shares and series B warrants for 239.8612 shares.

The total exchange value per $1,000 par amount of 11½% notes tendered by the early deadline will be $1,020 of Affinion Investments' 13½% senior subordinated notes due 2018.

Holders who tender their 11½% notes after the early deadline will receive $1,000 of new 13½% notes.

The company also will pay accrued interest to but excluding the settlement date.

On Nov. 7, some noteholders, including affiliates of Ares Management, LLC and investment funds affiliated with or managed by Angelo, Gordon & Co., which collectively held about $246 million, or 76%, principal amount of 11 5/8% notes and about $182 million, or 51%, principal amount of 11½% notes agreed to tender their note in the exchange offers.

Consent solicitation

The companies also are soliciting consents to amend the notes to remove substantially all of the restrictive covenants and default provisions in the note terms.

Holders tendering their notes must also deliver consents.

The proposed amendments require the consent of holders of at least a majority of the outstanding principal amount of each series of notes, not including those held by affiliates of Affinion.

The offers will end at 5 p.m. ET on Dec. 9.

The completion of the exchange offers is conditioned on the company receiving the needed consents to approve the proposed amendments.

The offer also are conditioned on Affinion obtaining waivers under its senior secured credit facility.

The information and exchange agent is D.F. King & Co., Inc. (800 848-3416, 212 269-5550 for dealers and brokers or affinion@dfking.com).

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

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