Tender, prepayment offers begin for Alliance Data 6%, 6.14% notes

By Angela McDaniels

Seattle, Oct. 15 - Aladdin Merger Sub, Inc. has begun a tender offer for Alliance Data Systems Corp.'s $250 million 6% series A senior notes due 2009 and $250 million 6.14% series B senior notes due 2011, according to a news release.

The company is also soliciting consents to proposed amendments to the notes that would eliminate substantially all of the restrictive covenants, eliminate certain events of default and modify or eliminate some other provisions.

Holders may not tender their notes with delivering consents and vice versa.

The tender offer and consent solicitation are being held in connection with Alliance Data's merger agreement with Aladdin Merger Sub and Aladdin Holdco, Inc. Following the merger, Alliance Data will be an affiliate of the Blackstone Group.

The tender offer will expire at 8 a.m. ET on Nov. 14, and the consent deadline is 5 p.m. ET on Oct. 26.

The payout for the notes will be determined on Oct. 29 based on the bid-side price of a reference security plus 50 basis points. The reference security for the 6% notes is the 4 7/8% U.S. Treasury note due May 15, 2009, and the reference security for the 6.14% notes is the 4 7/8% U.S. Treasury note due April 30, 2011.

The payout will include a consent fee of $30 for each $1,000 principal amount of notes tendered by the consent deadline.

Holders will also receive accrued interest to the payment date.

Prepayment offer

In addition, Alliance Data said it began a cash offer to prepay notes at par plus accrued interest.

Holders may tender their notes under the tender offer or the prepayment offer but not both.

The company noted that the payout under the tender offer is expected to be higher than par.

The prepayment offer will end at 9 a.m. ET on Nov. 14.

Notes tendered under the prepayment offer will be accepted on the date the merger closes.

The tender offer and consent solicitation are subject to the receipt of enough consents to approve the proposed amendments and the closing of the merger. The prepayment offer is also subject to the merger closing.

Credit Suisse (212 325-4951 or 212 325-5623) is the dealer manager and solicitation agent, and D.F. King & Co., Inc. (212 269-5550 or 800 769-7666) is information agent.

Dallas-based Alliance Data provides marketing, loyalty and transaction services.

Aladdin Merger Sub is a Delaware corporation formed by the Blackstone Group to carry out the merger agreement.

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