iPayment Holdings, Inc. and iPayment Inc. Announce Comprehensive Refinancing Agreement

Significantly reduces debt, improves free cash flow, and positions Company for growth and investment

WESTLAKE VILLAGE, CA –  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 the signing of an agreement for a comprehensive refinancing of iPayment with the holders of approximately 79% of the Company’s outstanding 9.50% Senior Secured Notes due 2019 (the “9.50% Notes), which also hold approximately 41% of the common stock of Holdings. The refinancing, once consummated, would result in a substantial deleveraging of the Company, and would enable the Company to materially expand its services and product offerings. The refinancing is expected to close in the first quarter of 2017.

“This agreement is an important milestone for iPayment and reflects the strong confidence and support for our business that iPayment’s significant stakeholders continue to demonstrate, said OB Rawls IV, Chief Executive Officer of iPayment. “When this refinancing is completed later this quarter, we will be well positioned to aggressively expand our channel sales initiatives, both in the traditional Agent/ISO space and in new, integrated verticals, and make significant investments in new technologies and infrastructure to support existing and new partners.

Robert Purcell, iPayment’s Chief Financial Officer, commented, “We are excited to have reached this significant agreement with a group of our investor partners, and look forward to completing the refinancing, which will reduce our total debt by approximately $185 million, and lower our cost of debt and improve our annual free cash flow by more than $15 million. With an improved credit profile, a strengthened financial position and increased liquidity, iPayment will be well positioned to deliver exceptional value to its customers, partners and investors.

The refinancing is subject to a number of conditions, including obtaining the 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 refinancing will be consummated.

Under the terms of the agreement entered into with these debt and equity holders, iPayment intends to launch an exchange offer in which the holders of the Company’s 9.50% Notes will have the opportunity to exchange their 9.50% Notes for a pro rata portion of:

  • a $42.5 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 $2.5 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 will have the option to either:

  • receive a cash payment in exchange for 100% of such holder’s common stock, determined based on a notional $25 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 will be correspondingly increased; or
  • maintain their ownership of Holdings common stock (which will 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 will 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 entering into the agreement with the Company have agreed to vote all shares of Holdings’ common stock held by them in favor of such amendments.

The securities to be issued in the refinancing will 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 https://www.ipaymentinc.com.