DALLAS, March 10,
2023 /PRNewswire/ -- Loyalty Ventures Inc. (Nasdaq:
LYLT) (the "Company") and certain of its subsidiaries filed
voluntary petitions for relief under chapter 11 of title 11 of the
United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
Southern District of Texas (the
"Bankruptcy Court"). In addition, earlier today, LoyaltyOne, Co.
("LoyaltyOne"), a subsidiary of the Company, sought protection
under the Companies' Creditors Arrangement Act (Canada) (the "CCAA") with the Ontario Superior
Court of Justice (the "Canadian Court").
In connection with the CCAA proceedings, LoyaltyOne filed
motions seeking Canadian Court approval under the CCAA of a sale
and investment solicitation process ("SISP"). Under the SISP,
interested parties would be invited to participate in a sale
process in accordance with the SISP procedures. Concurrent with the
issuance of this press release, Bank of Montreal (TSX: BMO) (NYSE: BMO), and its
subsidiaries BMO Financial Corp. and BMO Harris Bank N.A (together,
"BMO"), announced BMO's entry into a purchase agreement with
LoyaltyOne pursuant to which BMO will acquire LoyaltyOne's AIR
MILES Reward Program (AIR MILES) business. The consummation of the
sale transaction is conditioned upon LoyaltyOne not receiving a
more favorable offer from another party in accordance with the
SISP, and other customary closing conditions.
The Company believes that BMO's acquisition of AIR MILES would
secure the program and better position AIR MILES to continue
delivering its leading loyalty program to nearly 10 million
Canadian collectors.
In connection with the chapter 11 cases, the Company has filed
customary motions authorizing it to proceed with its operations in
the ordinary course. Subject to approval of the Canadian Court,
LoyaltyOne, as borrower, will enter into a debtor-in-possession
("DIP") facility with an affiliate of BMO, as lender, pursuant to
which the lender will make available to LoyaltyOne a non-revolving
secured credit facility in the amount of $70
million. Subject to the approval of the Bankruptcy
Court and the Canadian Court, the Company, as borrower, and
LoyaltyOne, as lender, will enter into an intercompany DIP
facility. The Company currently expects that the intercompany DIP
facility will provide sufficient liquidity to meet its financial
obligations during the duration of the chapter 11 cases.
The decision to file for chapter 11 was made after a careful
evaluation of the Company's financial situation and a determination
that it is in the best interests of the Company and its
stakeholders. For more information on the chapter 11 cases and the
CCAA proceedings, please read the Company's Current Report on Form
8-K, filed with the U.S. Securities and Exchange Commission (the
"SEC") today. The Company's SEC filings are available publicly on
the SEC's website at www.sec.gov.
For Bankruptcy Court filings and other additional information
related to the chapter 11 cases available from time to time, please
see https://cases.ra.kroll.com/LVI, a website administered by Kroll
Restructuring Administration LLC, the Company's third-party
bankruptcy claims and noticing agent.
The Company also announced today its intention to voluntarily
delist its common stock, par value $0.01 per share (the "Common Stock") from the
Nasdaq Global Select Market ("Nasdaq") and deregister the Common
Stock from Section 12(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Set forth below is a summary of
material facts surrounding the Company's withdrawal notice as
required by Rule 12d2-2(c)(2)(iii) under the Exchange Act and
Nasdaq Listing Rule 5840(j)(1)(iii).
The Company's board of directors made the decision to delist and
deregister following careful consideration of the Company's current
situation, including filing of the Company's chapter 11 cases. In
addition, the board of directors determined that it is in the
Company's best interest to withdraw the listing and registration to
reduce the Company's costs of compliance with the rules of the SEC
and Nasdaq. The Company has notified Nasdaq of its intent to
voluntarily delist its Common Stock, and will file a notice on Form
25 relating to such delisting with the SEC on or about March 20, 2023. The Company has not arranged for
listing or registration of its Common Stock on another national
securities exchange. The Common Stock may be eligible to be quoted
on the Pink Open Market operated by the OTC Markets Group Inc. if a
market maker sponsors the security and complies with Rule 15c2-11
under the Exchange Act, but the Company can provide no assurances
that a public market for trading the Common Stock will exist now or
in the future.
The Company is committed to working closely with its
stakeholders to minimize the impact of the bankruptcy process and
to ensure that its creditors are treated fairly. The Company's
previously announced sale of its BrandLoyalty business to
Opportunity Partners B.V. remains on track to close by the second
quarter of 2023. PJT Partners LP and Alvarez & Marsal Inc. are
acting as investment banker and financial advisor, respectively,
and Akin Gump Strauss Hauer & Feld LLP and Cassels Brock & Blackwell LLP are acting as
legal advisors to the Company and LoyaltyOne.
Caution Regarding Forward-Looking Statements
This
release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Exchange Act. Forward-looking statements give our
expectations or forecasts of future events and can generally be
identified by the use of words such as "believe," "expect,"
"anticipate," "estimate," "intend," "project," "plan," "likely,"
"may," "should" or other words or phrases of similar import.
Similarly, statements that describe our business strategy, outlook,
objectives, plans, intentions or goals also are forward-looking
statements. The above statements regarding the expected impact of
the chapter 11 cases constitute forward-looking statements that are
based on the Company's current expectations. Examples of
forward-looking statements include, but are not limited to,
statements we make regarding, and the guidance we give with respect
to, our anticipated operating or financial results and future
economic conditions, all of which are subject to risks that
include, but are not limited to, our high level of indebtedness;
increases in market interest rates; the potential failure to
satisfy the closing conditions under the purchase agreement for our
BrandLoyalty business, which may result in the sale transaction not
being consummated; the potential failure to satisfy the borrowing
conditions under the bridge loan agreement in connection with the
sale of our BrandLoyalty business, which may result in the
BrandLoyalty business not being able to obtain bridge loans, which
could lead to the insolvency of the BrandLoyalty business;
continuing impacts related to COVID-19, including variants, labor
shortages, reduction in demand from clients, supply chain
disruption for our reward suppliers and capacity constraints,
rising costs or other disruptions in the airline or travel
industries; changes in geopolitical conditions, including the
Russian invasion of Ukraine and
related global sanctions and Russian restrictions or actions with
respect to local assets; fluctuation in foreign exchange rates;
execution of restructuring plans and any resulting cost savings;
loss of, or reduction in demand for services from, significant
clients; loss of active AIR MILES Reward Program collectors or
greater than expected redemptions by the same; unfavorable
resolution of pending or future litigation matters; disruption to
operations due to the separation from our former parent or failure
of the separation to be tax-free; new regulatory limitations
related to consumer protection or data privacy limiting our
services; loss of consumer information due to compromised physical
or cyber security; the transaction support agreement, pursuant to
which we, along with the other parties thereto, agreed to the
principal terms of our proposed financial restructuring, may be
terminated by certain of its parties if specified milestones are
not achieved, amended, or waived, or if certain events occur; our
ability to operate within the restrictions and the liquidity
limitations of the DIP financings we anticipate incurring in
connection with the chapter 11 cases and the CCAA proceedings; our
receipt of other acquisition bids and negotiations with associated
bidders in connection with the SISP for our AIR MILES business; and
the ability to obtain relief from the Bankruptcy Court to
facilitate the smooth operation of our business during the pendency
of the chapter 11 cases and other risks and uncertainties relating
to the chapter 11 cases, including but not limited to, our ability
to obtain approval of the Bankruptcy Court and the Canadian Court
with respect to motions or other requests made to the Bankruptcy
Court and the Canadian Court throughout the course of the cases,
including with respect to our CCAA DIP facility and intercompany
DIP facility, the SISP, and the stalking horse purchase agreement
with BMO or the consummation of the transactions contemplated
therein, the effects of the cases on us and on the interests of
various constituencies, Bankruptcy Court and Canadian Court rulings
in the cases and the outcome of the cases in general, the length of
time we will operate under the cases, risks associated with
third-party motions in the cases, regulatory approvals required to
emerge from chapter 11, the potential adverse effects of the cases
on our liquidity or results of operations and increased legal and
other professional costs in connection with the cases.
We believe that our expectations are based on reasonable
assumptions. Forward-looking statements, however, are subject to a
number of risks and uncertainties that could cause actual results
to differ materially from the projections, anticipated results or
other expectations expressed in this release, and no assurances can
be given that our expectations will prove to have been correct.
Additional risks and uncertainties include, but are not limited to,
factors set forth in the Risk Factors section of both (1) our
Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and (2) any updates in Item 1A,
or elsewhere, in our Quarterly Reports on Form 10-Q filed for
periods subsequent to such Form 10-K or any updates thereto. Our
forward-looking statements speak only as of the date made, and we
undertake no obligation, other than as required by applicable law,
to update or revise any forward-looking statements, whether as a
result of new information, subsequent events, anticipated or
unanticipated circumstances or otherwise.
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SOURCE Loyalty Ventures Inc.
