iPayment Holdings, Inc. and iPayment Inc. Announce Revised Comprehensive Refinancing Proposal

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Jan 30, 2017, 18:09 ET

WESTLAKE VILLAGE, Calif., Jan. 30, 2017 /PRNewswire/ -- iPayment, Inc. (the "Company"), a trusted provider of payment and processing solutions for small and medium-sized businesses (SMBs), and its parent, iPayment Holdings, Inc. ("Holdings", and together with the Company, "iPayment"), today announced it has received a revised offer from holders of approximately 82% of the Company's outstanding 9.50% Senior Secured Notes due 2019 (the "9.50% Notes"), which also hold approximately 46% of the common stock of Holdings, for a comprehensive refinancing of iPayment.

As announced on January 17, 2017, iPayment entered into an agreement for a comprehensive refinancing of iPayment with certain of these debt and equity holders. This revised offer reduces the cash payments payable to Noteholders that participate in the exchange offer by an aggregate of $4 million and increases the notional equity value for Holdings by $11 million, resulting in an increased cash payment to existing holders of Holdings common stock who elect to receive cash in exchange for their common stock.

The Special Committee of the Board of Directors of iPayment, in conjunction with its independent investment bank and independent legal counsel, and the Board of Directors of iPayment, in conjunction with its investment bank and legal counsel, are considering the revised offer.

There is no assurance that a definitive amended support agreement will be executed or, if executed, that the proposed transaction will be consummated.

The revised offer is subject to a number of conditions, including obtaining a new credit facility to be arranged by J.P. Morgan, many of which are outside of the control of iPayment, and there can be no assurance as to whether, when, or on what terms the revised offer would be consummated.

Under the terms of the revised offer from these debt and equity holders, iPayment would launch an exchange offer in which the holders of the Company's 9.50% Notes would have the opportunity to exchange their 9.50% Notes for a pro rata portion of:

a $40.0 million cash payment from iPayment;
cash in amount equal to accrued but previously unpaid interest, subject to certain conditions being met;
for those noteholders meeting an early tender deadline, an additional cash payment of $1.0 million from iPayment;
91% of a new issue of preferred stock of Holdings; and
91% of the common stock of Holdings.

In connection with the refinancing transactions, each existing holder of Holdings common stock would have the option to either:

receive a cash payment in exchange for 100% of such holder's common stock, determined based on a notional $36 million equity value for Holdings; to the extent this option is elected, the percentages of the preferred stock and the common stock to be received by the tendering Noteholders and by non-electing holders of common stock in the exchange offer would be correspondingly increased; or
maintain their ownership of Holdings common stock (which would be diluted to 9% of the aggregate outstanding common stock) and receive a distribution of a pro rata portion of 9% of the new issue of Holdings preferred stock.

Noteholders that hold existing Holdings common stock and participate in the exchange offer would be required to waive the right to tender their existing common stock and to receive the cash payment in exchange for their existing common stock.

As part of the refinancing, the Company anticipates entering into one or more new credit agreements and has engaged J.P. Morgan to exclusively arrange any such transaction. The Company would also repay the obligations outstanding under its existing credit agreement and certain other indebtedness of the Company and Holdings, and amend the existing indenture governing the 9.50% Notes, and make certain amendments to Holdings' certificate of incorporation, bylaws and existing investor rights agreement. The debt and equity holders that enter into a revised support agreement with the Company in connection with the revised offer would agree to vote all shares of Holdings' common stock held by them in favor of such amendments.

The securities to be issued in the refinancing would not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the U.S. absent registration or an applicable exemption from such registration requirements. This notice does not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such jurisdiction.

Forward-Looking Statements

Information in this press release may contain "forward-looking statements" about the Company and Holdings. These forward-looking statements are subject to risks, uncertainties and assumptions, many of which are beyond our control, and are not guarantees of future results, performance or achievements, and actual results, performance or achievements could differ materially from our current expectations as a result of numerous factors, including but not limited to the following: the effect of pending and threatened litigation; acquisitions; liability for merchant chargebacks; restrictive covenants governing our indebtedness; migration of merchant portfolios to new bank sponsors; our reliance on card payment processors and on independent sales organizations; changes in interchange fees; risks associated with the unauthorized disclosure of data; imposition of taxes on Internet transactions; actions by our competitors; and risks related to the integration of companies and merchant portfolios that we have acquired or may acquire. We undertake no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

About iPayment

iPayment is a trusted provider of payment processing solutions in the U.S. With over 18 years of experience and more than 140,000 SMB customers, the company is consistently recognized for its depth of payments experience, breadth of product offerings, and commitment to transparency and SMB support. From new product innovation to customer service satisfaction, iPayment is an organization focused on small business enablement and delivering relevant and impactful services and solutions that help partners and SMB customers grow their individual businesses. For more information on iPayment, please visit http://www.ipaymentinc.com.

SOURCE iPayment, Inc.