- Marketing service holds $204 million in remaining notes
- Corporate credit rating raised above ”selective default”
- S&P expects weak operating performance
”We assess the company’s business risk profile as ‘weak’ because of continued membership attrition in many of its services, some affinity partner concentration, especially in the financial services industry, and competitive pressures in the membership marketing business,” S&P said in a note issued in June.
Affinion tendered about $89 million, or 30 percent of its existing holding company notes, in June, leaving about $204 million of the existing holding company’s notes outstanding, S&P said. The offering included Series A warrants and new warrants to purchase shares of its Class B common stock for debt that is due in 2018.
S&P raised its long-term corporate credit rating on Affinion Group Holdings Inc to ‘CCC+’ from ’SD’. The former rating means the debtor is currently vulnerable and dependent on favorable business conditions to meet its financial commitments; while the latter stands for selective default on a specific issue or class of obligations while meeting its payment requirements, according to S&P’s ratings definitions.
The ratings agency said it could lower Affinion’s rating if operating performance deteriorates faster than anticipated; or it could raise its view if Affinion improves its performance, reduces its debt and maintains a healthy margin for compliance with financial covenants.
Affinion said April 24 its first-quarter revenue fell 7.5 percent to $321.4 million, mostly because of expected declines in North American products revenues but partially offset by growth in its International unit. Adjusted EBITDA fell 17.5 percent to $70.5 million, from $85.5 million in the year-ago quarter.
Apollo bought Affinion in 2005 for $1.8 billion and filed for initial public offerings for the company in 2007 and 2010. Affinion named Gregory Miller as chief financial officer in December.