Apollo-backed Affinion draws debt downgrade, names new CFO

The company named Gregory Miller on Dec. 19 as chief financial officer to succeed Mark Gibbens, who resigned.

Miller will take the job on Jan. 20 after working as senior vice president financial planning and divisional operations at the Madison Square Garden Co, according to a statement from the firm. Miller had worked at Affinion for 11 years, most recently as CFO of Affinion North America.

“We are extremely grateful to Mark [Gibbons] for the contributions he made, which included supporting our strategic initiatives and resolving the near-term needs of our capital structure, as the recent closing of our debt exchange provides us with substantial flexibility in managing, diversifying and investing in our business over the next few years,” Affinion CEO Todd Siegel said in a prepared statement.

On the debt front, Standard & Poor’s said it’s lowering Affinion’s long-term corporate credit rating to SD, selective default, from CC. The agency said it expects to raise Affinon’s corporate credit rating over the near term to CCC+.

Affinion faces challenges from financial regulation and the viability of its highly-leveraged capital structure, S&P analysts said. “We expect that pressures will continue on its domestic membership business” but on the plus side, Affinion has seen growth in its smaller loyalty products business and international operations, analysts noted.

Affinion recently issued about $292.8 million aggregate principal amount of 13.75 percent/14.5 percent senior secured PIK/toggle notes due 2018, as well as warrants. It also issued approximately $360 million aggregate principal amount of new 13.5 percent senior subordinated notes due 2018.

“We view the exchange as distressed and tantamount to a default, given that Affinion Group Holdings most likely was not going to be able to service its November, 2014 interest payment,” S&P credit analysts Elton Cerda and Hal Diamond said in a note to clients on Dec. 17.

Affinion board member Skip Victor, named on Dec. 16, now works as managing director at both Balmoral Funds and Duff & Phelps Restructuring.

Among other changes at Affinion, the firm on Dec. 17 named Zachary Kaplan to the board to replace Anton Levy, who stepped down.  Kaplan was nominated by investment partnerships sponsored by General Atlantic.

Affinion was one of 22 private equity portfolio firms included in Standard & Poor’s “Weakest Links” list earlier this year. Affinion Group holdings carried $2.69 billion in debt as of Aug. 26, according to the list.

Apollo bought Affinion in 2005 for $1.8 billion and filed for initial public offerings for the firm both in 2007 and 2010. Apollo was also trying to sell Affiniom back in 2010 for $3 billion, according to a report by The New York Post.

Standard & Poor’s  assigns selective default ratings when it believes a company has selectively defaulted on a specific issue or class of obligations but it will continue to meet its payment obligations on other issues or classes of obligations in a timely manner, the credit agency said.

Affinion sells subscription-based services and personal protection, points program management, insurance and other marketing services aimed at increasing customer loyalty.

Spokespeople for Apollo, General Atlantic and Affinion did not respond to emails from Buyouts.

Affinion Holdings recently issued approximately $292.8 million aggregate principal amount of 13.75 percent/14.5 percent senior secured PIK/toggle notes due 2018  as well as warrants. It also issued approximately $360 million aggregate principal amount of new 13.5 percent senior subordinated notes due 2018.

 

“We view the exchange as distressed and tantamount to a default, given that Affinion Group Holdings most likely was not going to be able to service its November, 2014 interest payment,” S&P credit analysts Elton Cerda and Hal Diamond said in a note to clients on Dec. 17.

 

Affinion board member Skip Victor, named on Dec. 16, now works as managing director both at Balmoral Funds and Duff & Phelps Restructuring.

 

Affiion, which sells subscription-based services and personal protection, points program management, insurance and other marketing services aimed at increasing customer loyalty,  named Gregory Miller on Dec. 19 as chief financial officer to succeed Mark Gibbens, who resigned.

 

Miller will take the job on Jan. 20 after working as senior vice president financial planning and divisional operations at the Madison Square Garden Company, according to a statement from the firm. Miller had worked at Affinion for 11 years, most recently as CFO of Affinion North America.

 

“We are extremely grateful to Mark [Gibbons] for the contributions he made, which included supporting our strategic initiatives and resolving the near-term needs of our capital structure, as the recent closing of our debt exchange provides us with substantial flexibility in managing, diversifying and investing in our business over the next few years,” Affinion CEO Todd Siegel said in a prepared statement. “At the same time, we couldn’t be more pleased to welcome Greg back to Affinion at this particular time, as his proven ability in guiding the development of new initiatives and his extensive familiarity with our businesses allows him to hit the ground running at full speed.”

 

Among other changes at Affinion, the firm on Dec. 17 named Zachary Kaplan to the board to replace Anton Levy, who stepped down.  Kaplan was nominated by investment partnerships sponsored by General Atlantic.

 

Earlier this year, Affinion was one of 22 private equity firms included in Standard & Poor’s “Weakest Links” list. Affinion Group holdings carried $2.685 billion in debt as of Aug. 26, according to the list.

 

Apollo bought Affinion in 2005 for $1.8 billion and filed for initial public offerings for the firm both in 2007 and 2010. In 2010, reports surfaced the Apollo was trying to sell Affinion for $3 billion, according to a report by The New York Post.

 

Standard & Poor’s  assigns selective default ratings when it believes a company has selectively defaulted on a specific issue or class of obligations but it will continue to meet its payment obligations on other issues or classes of obligations in a timely manner, the credit agency said.

 

Spokespeople for Apollo, General Atlantic and Affinion did not respond to emails from Buyouts.