SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

  

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported):

July 1, 2019

 

ALLIANCE DATA SYSTEMS CORPORATION

(Exact Name of Registrant as Specified in Charter)

 

  

 

  

3075 LOYALTY CIRCLE

COLUMBUS, OHIO 43219

(Address and Zip Code of Principal Executive Offices)

 

(614) 729-4000

(Registrant’s Telephone Number, including Area Code)

 

NOT APPLICABLE

(Former name or former address, if changed since last report)

   

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company [ ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Securities registered pursuant to Section 12(b) of the Act:

Item 2.01    Completion of Acquisition or Disposition of Assets.

As previously reported, on April 12, 2019, Alliance Data, and certain subsidiaries of Alliance Data (together with Alliance Data, the “Sellers”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Publicis Groupe, S.A., a French sociéte anonyme (“Publicis”), and certain subsidiaries of Publicis (together with Publicis, the “Purchasers”), pursuant to which the Purchasers agreed to acquire the Epsilon business of Alliance Data (“Epsilon”) by means of a sale of all of the outstanding equity interests of certain subsidiaries held by the Sellers which operate Epsilon.  On July 1, 2019, the Sellers completed the sale of Epsilon to the Purchasers for approximately $4.4 billion in cash, subject to certain adjustments specified in the Purchase Agreement, including for indebtedness, cash, working capital and transaction expenses of Epsilon at the closing of the transaction. In connection with the closing of the Epsilon transaction, each of Epsilon Data Management, LLC, Aspen Marketing Services, LLC, Commission Junction LLC and Conversant LLC were released as guarantors under Alliance Data’s Amended and Restated Credit Agreement, dated as of June 14, 2017 (as amended, supplemented or otherwise modified prior to July 1, 2019) and the indentures governing each of Alliance Data’s Senior Notes due 2021, Alliance Data’s 5.375% senior notes due August 1, 2022, Alliance Data’s 4.500% senior notes due March 15, 2022 and Alliance Data’s 5.2500% senior notes due November 15, 2023. In addition, the condition precedent in the redemption notice for each of the 4.500% senior notes due March 15, 2022 and 5.2500% senior notes due November 15, 2023 was satisfied and the redemption date for both series will be July 10, 2019.

Alliance Data’s unaudited pro forma condensed consolidated financial statements giving effect to the completion of the sale are filed as Exhibit 99.1 hereto.

Item 9.01    Financial Statements and Exhibits.

(b) Pro Forma Financial Information

The unaudited pro forma consolidated financial statements of Alliance Data specified in Article 11 of Regulation S-X are filed as Exhibit 99.1 hereto and incorporated herein by reference.

(d) Exhibits

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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On July 1, 2019, Alliance Data Systems Corporation, a Delaware corporation (the “Company”), along with certain subsidiaries of the Company (together with Alliance Data, the “Sellers”) completed the previously announced sale of the Company’s Epsilon business (“Epsilon”) pursuant to that certain Securities Purchase Agreement, dated April 12, 2019, by and among the Sellers, Publicis Groupe, S.A. (“Publicis”), and certain subsidiaries of Publicis (together with Publicis, the “Purchasers”) to the Purchasers for $4.4 billion in cash, subject to certain adjustments specified therein. In the first quarter of 2019, Epsilon met the criteria set forth in Accounting Standards Codification (“ASC”) 205-20, “Presentation of Financial Statements — Discontinued Operations,” and was classified as a discontinued operation within the Company’s unaudited condensed consolidated statement of income for the three months ended March 31, 2019.

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(a)	Reflects the cash proceeds received, net of estimated transaction costs and closing adjustments, in connection with the Epsilon divestiture.

(b)	Reflects the assets and liabilities classified as held for sale in accordance with ASC 205.

(c)	Reflects the Company’s income tax payable resulting from the Epsilon divestiture and the write-off of associated deferred tax assets and liabilities.

(d)

Reflects the preliminary estimated after-tax loss on the sale of Epsilon. The actual after-tax loss to be recorded on the sale of Epsilon may change based on items such as adjustments to the estimated transaction costs as well as final calculations related to the tax basis of the assets. The preliminary estimated loss was calculated as follows (in millions):

(e)	Reflects the mandatory repayment of senior debt upon consummation of the sale of Epsilon. Includes a repayment of approximately $1.9 billion of senior notes including related call premiums and a mandatory payment of $500.0 million of the revolving credit facility.

(f)	Reflects the write-off of unamortized debt issuance costs associated with the Company’s revolving credit facility.

(g)

Reflects the mandatory repayment of senior debt upon consummation of the sale of Epsilon. Includes a repayment of approximately $1.9 billion of senior notes and a mandatory payment of $500.0 million of the revolving credit facility, offset in part by the write-off of unamortized debt issuance costs associated with the Company’s senior notes.

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(h)	Represents the loss on extinguishment of debt, comprised of $46.1 million related to call premiums associated with the repayment of the Company’s senior notes and $24.0 million related to the write-off of unamortized debt issuance costs.

(i)

In the first quarter of 2019, Epsilon was presented as a discontinued operation in accordance with ASC 205 in our Quarterly Report on Form 10-Q. Included in our presentation was the allocation of interest expenses associated with $1.9 billion in senior notes. On April 30, 2019, the Company amended its credit agreement, which among other items, provided that upon consummation of the sale of Epsilon, a mandatory payment of $500.0 million of the revolving credit facility will be required and all of the Company’s outstanding senior notes will be required to be redeemed. The pro forma adjustment represents the interest expense associated with the $500.0 million mandatory repayment of the revolving credit facility, as well as the related income tax effect, which was not reflected in our historical results in our Quarterly Report on Form 10-Q for the period ended March 31, 2019.

(j)

The Discontinued Operations of Epsilon columns in the unaudited pro forma condensed consolidated statements of income represent the historical financial results directly attributable to Epsilon and the interest expense associated with the mandatory repayment of debt from the use of proceeds from the transaction, in accordance with ASC 205.