Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. iPayment, Inc. (1140184) 10-Q published on Nov 14, 2014 at 5:34 pm
Reporting Period: Sep 29, 2014
On October 14, 2014, iPayment and Holdings (collectively, the “Companies”) appointed Greg Cohen as President of the Companies. Under the terms of his employment, Mr. Cohen will receive a base salary of $400,000 per annum, and will be eligible to receive an annual performance-based bonus of up to 75% his annual base salary. In addition, Mr. Cohen will receive an initial grant of 125,000 phantom units pursuant to Holdings’ Equity Incentive Plan within thirty (30) days of the commencement of his employment, and is eligible for future additional phantom unit grants based on satisfaction of certain conditions. Mr. Cohen also serves on the Executive Committee of the Board of Directors of the Electronic Transaction Association, for which he will assume the role of President-Elect as of January 1, 2015.
On November 7, 2014, the Companies launched exchange offers (the "Exchange Offers") and related consent solicitations (the "Consent Solicitations") to holders of iPayment’s outstanding 10.25% Senior Notes due 2018 (the "Opco Notes") and holders of Holding’s outstanding 15.00%/15.00% Senior Notes due 2018 (the "Holdco Notes" and, together with the Opco Notes, the "Existing Notes") pursuant to an Offers to Exchange and Consent Solicitation Statement, dated as of November 7, 2014 (as it may be amended from time to time, the "Statement") in accordance with the terms of the previously announced Exchange Offer Support Agreement (as it may be amended from time to time, the "Support Agreement") described in the Companies’ Current Report on Form 8-K filed with the Securities and Exchange Commission on September 29, 2014. Pursuant to the Exchange Offers, (i) holders of Opco Notes will exchange their existing Opco Notes for their pro rata share of (a) up to $285 million aggregate principal amount of new 8.50% Senior Secured Notes due 2019 (the "New Notes") and (b) up to 61.5% of the common stock of Holdings (the "Common Stock") to be issued and outstanding (without giving effect to the exercise of any Warrants (defined below)) if the Exchange Offers are completed and (ii) holders of Holdco Notes will exchange their existing Holdco Notes for their pro rata share of (a) up to $30 million aggregate principal amount of New Notes, (b) up to 18.5% of the Common Stock to be issued and outstanding (without giving effect to the exercise of any Warrants) if the Exchange Offers are completed, and (c) warrants to purchase Common Stock (the "Warrants") representing up to 40.0% of the Common Stock on a fully diluted basis. In connection with the Exchange Offers, existing holders of equity securities of Holdings will be issued Warrants representing 47.5% of the Common Stock on a fully diluted basis assuming 100% participation in the Exchange Offers by holders of the Existing Notes.
The Exchange Offers are being made pursuant to the exemption provided for under Section 4(a)(2) of the Securities Act, and the New Notes, the Common Stock and the Warrants are being offered and issued only to qualified institutional buyers as defined in Rule 144A and accredited investors as defined in 506 Regulation D under the Securities Act of 1933, as amended (the “Securities Act”). Consequently, the Common Stock, the Warrants and the New Notes offered have not been, and except as described in the Statement will not be, registered under the Securities Act , and may not be offered or sold in the United States absent registration under the Securities Act and applicable state securities laws or an applicable exemption therefrom.
As further described in our Current Report on Form 8-K filed with the SEC on November 10, 2014, on November 7, 2014, we commenced Exchange Offers and related consent solicitations (together with the Exchange Offers, the “Offers”) to holders of our Existing Notes, pursuant to which such holders may tender their Existing Notes in exchange for a combination of new 8.50% Senior Secured Notes due 2019, common stock of Holdings and/or warrants, as applicable, to purchase such common stock of Holdings. If the Offers are consummated, our total long-term debt would be substantially reduced and substantially all of the restrictive covenants and related events of default in the 10.25% Notes Indenture and the 15.00%/15.00% Notes Indenture would be eliminated. However, the consummation of the Offers is subject to the satisfaction of certain conditions, including, but not limited to, the tender of a minimum aggregate principal amount of 95% (the “Minimum Tender Conditions”) of each series of Existing Notes. There can be no assurance that the Minimum Tender Conditions or any other condition to the Offers will be satisfied and, therefore, the Offers may not be consummated. If we do not consummate the Offers, we will continue to have our current high level of indebtedness, which could have a material adverse effect on our business, financial condition and results of operations, and we may be forced to seek alternative methods of refinancing our existing indebtedness, including the Existing Notes.
payment of interest or the repayment of our indebtedness, including any cash payments due upon the maturity of such indebtedness.
If we are unable to service our debt, we could face difficulty in funding fixed operating expenses, be forced to pare back operations, further restructure our debt or seek additional equity capital, and we may be unable to take any of these actions on satisfactory terms or in a timely manner, or at all. Further, any of these actions may not be sufficient to allow us to service our debt obligations or may have a materially adverse effect on our results of operations and financial condition. In addition, the agreements that would govern our outstanding debt if the Offers are consummated would continue to limit our ability to take certain of these actions. If we cannot make scheduled payments on our debt, we would be in default, and as a result, holders of such debt could declare all outstanding principal and interest to be due and payable and our existing and future lenders could, under certain circumstances, terminate their commitments to lend us money and foreclose against the assets securing our borrowings.