13D Filing: Elliott Associates, L.P. and Affinion Group Holdings Inc. (AFGR)

(1)

Represents 136,000 shares of Common Stock owned by Elliott Associates, L.P. and 682,187 shares of Common Stock issuable upon exercise of Warrants owned by Elliott Associates, L.P.  The Reporting Persons (as defined below) are prevented from owning more than 17.2% of the shares of the issuer on a fully diluted basis without obtaining the consent of the North Dakota Insurance Commissioner.

(2)

For purposes of calculating beneficial ownership of the Reporting Persons, the total number of shares of Common Stock outstanding is based on (1) 9,093,330 shares of Common Stock outstanding as of July 26, 2017 as reported by the Issuer in its quarterly report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2017 and (2) 2,131,836 shares of Common Stock issuable upon exercise of the Warrants.

(1)  Represents 289,000 shares of Common Stock owned by Elliott International, L.P. and 1,449,649 shares of Common Stock issuable upon exercise of Warrants owned by Elliott International, L.P.  The Reporting Persons (as defined below) are prevented from owning more than 17.2% of the shares of the issuer on a fully diluted basis without obtaining the consent of the North Dakota Insurance Commissioner.

(2) For purposes of calculating beneficial ownership of the Reporting Persons, the total number of shares of Common Stock outstanding is based on (1) 9,093,330 shares of Common Stock outstanding as of July 26, 2017 as reported by the Issuer in its quarterly report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2017 and (2) 2,131,836 shares of Common Stock issuable upon exercise of the Warrants.

(1)  Represents 289,000 shares of Common Stock owned by Elliott International, L.P. and 1,449,649 shares of Common Stock issuable upon exercise of Warrants owned by Elliott International, L.P. The Reporting Persons (as defined below) are prevented from owning more than 17.2% of the shares of the issuer on a fully diluted basis without obtaining the consent of the North Dakota Insurance Commissioner.

(2) For purposes of calculating beneficial ownership of the Reporting Persons, the total number of shares of Common Stock outstanding is based on (1) 9,093,330 shares of Common Stock outstanding as of July 26, 2017 as reported by the Issuer in its quarterly report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2017 and (2) 2,131,836 shares of Common Stock issuable upon exercise of the Warrants.

The following constitutes Amendment No.2 to the Schedule 13D filed by the undersigned (“Amendment No. 2”). This Amendment No. 2 amends the Schedule 13D as specifically set forth herein.

ITEM 5.

Interest in Securities of the Issuer.

Item 5(a) is hereby amended and restated as follows:

The aggregate percentage of Common Stock reported owned by each person named herein is based upon 11,225,166 shares of Common Stock outstanding, based on the 9,093,330 shares of Common Stock outstanding as of July 26, 2017 as reported by the Issuer in its quarterly report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2017 and 2,131,836 shares of Common Stock issuable upon exercise of the Warrants.

As of the date hereof, Elliott beneficially owned 818,187 shares of Common Stock, including 682,187 shares of Common Stock issuable upon exercise of the Warrants, constituting approximately 7.3% of the shares of Common Stock outstanding.

As of the date hereof, Elliott International beneficially owned 1,738,649 shares of Common Stock, including 1,449,649 shares of Common Stock issuable upon exercise of the Warrants, constituting approximately 15.5% of the shares of Common Stock outstanding. EICA, as the investment manager of Elliott International may be deemed to beneficially own the 1,738,649 shares of Common Stock beneficially owned by Elliott International, constituting approximately 15.5% of the shares of Common Stock outstanding.

Collectively, Elliott, Elliott International and EICA beneficially own 2,556,836 shares of Common Stock, including 2,131,836 shares of Common Stock issuable upon exercise of the Warrants, constituting approximately 22.8% of the shares of Common Stock outstanding.

The shares beneficially owned by the Reporting Persons represent less than 17.2% of the shares of Affinion Group on a fully diluted basis.

ITEM 6.

CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.

Item 6 is hereby amended and restated as follows:

Pursuant to the Investor Purchase Agreement, on May 10, 2017, the Reporting Persons acquired Warrants (the “Warrants”) to acquire up to 2,131,836 shares of Common Stock at an exercise price equal to $0.01.  However, the Reporting Persons are prevented from exercising the Warrants to the extent that after giving effect to such exercise, the Reporting Persons would beneficially own in excess of 17.2% of the shares of Affinion Group on a fully diluted basis without the consent of the North Dakota Insurance Commissioner.

In connection with the Investor Purchase Agreement, on May 10, 2017, the Issuer entered into a Warrant Agreement with American Stock Transfer & Trust Company, LLC, as warrant agent (the “Warrant Agreement”), setting forth the terms of the New Warrants. Pursuant to the terms of the Warrant Agreement, the New Warrants are immediately exercisable upon issuance and will terminate on the earlier to occur of (i) November 10, 2022 and (ii) five business days following the consummation of a sale of Affinion Holdings or other similar fundamental transaction. Each New Warrant is exercisable for one share of Common Stock at a price equal to $0.01.  The Warrants contain customary provisions for the adjustment of the number of shares of Common Stock issuable upon exercise in the event of the occurrence of any organic dilutive (or anti-dilutive) events, including, but not limited to, splits, combinations, stock dividends and similar transactions, as well as in the event of dividends or distributions in respect of Common Stock to the extent that holders of Warrants are not permitted to participate on an as-exercised basis.

Neither the Warrants, nor the Common Stock issuable upon the exercise thereof, are registered securities, and therefore are subject to restrictions on transfers under securities laws.

Holders of Warrants will be entitled to participate in dividends on an as-exercised basis. Holders will not be entitled to any other rights of holders of Common Stock until, and to the extent, they have validly exercised their Warrants.

The Warrant Agreement is attached as an exhibit to the initial Schedule 13D and is incorporated herein by reference.  The foregoing summary of the Warrant Agreement is qualified in its entirety by reference to such exhibit.

Pursuant to the Investor Purchase Agreement and the Indenture, dated as of May 10, 2017, the Reporting Persons hold $317,180,804 of the Issuer’s Senior Cash 12.5%/PIK Step-Up to 15.5% Notes due 2022 (the “Notes”).  The Notes are unsecured senior obligations of the Issuer. The New Notes are guaranteed by each of Affinion Group Holdings, Inc. (“Affinion Group”) and Affinion Group’s restricted subsidiaries that guarantee the Notes. The New Notes will mature on November 10, 2022.   Interest on the Notes is payable semi-annually in arrears on May 10 and November 10 of each year, commencing on November 10, 2017, and will accrue from May 10, 2017. For additional information regarding the Notes, reference is made to the Form 8-K filed by the Issuer on May 12, 2017.

On March 31, 2017 Elliott and Elliott International entered into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”) in which the Issuer agreed to register certain equity securities under the Securities Act of 1933. The Registration Rights Agreement is attached as an Exhibit to Amendment 1 of this Schedule 13D and is incorporated herein by reference.

On March 31, 2017, the Reporting Persons entered into a Support Agreement (the “Support Agreement”) with the Issuer and certain other holders of the Issuer’s 7.875% Senior Notes due 2018.  Pursuant to the Support Agreement, the Reporting Persons agreed, among other things, to support certain transactions initiated by the issuer. The Support Agreement is attached as an Exhibit to Amendment 1 to this Schedule 13D and is incorporated herein by reference.

On May 22, 2017 Elliott, Elliott International and EICA entered into a Joint Filing Agreement (the “Joint Filing Agreement”) in which the parties agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of the Issuer to the extent required by applicable law. The Joint Filing Agreement is attached as an exhibit to the initial Schedule 13D and is incorporated herein by reference.

Except as described above in this Item 6, none of the Reporting Persons has any contracts, arrangements, understandings or relationships with respect to the securities of the Issuer.

SIGNATURES

After reasonable inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information with respect to it set forth in this statement is true, complete, and correct.

Dated:

August 22, 2017