Loyalty Ventures and certain of its subsidiaries filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas. In addition, earlier today, LoyaltyOne, a subsidiary of the company, sought protection under the companies’ Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice.
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, if approved, interested parties would be invited to participate in a sale process in accordance with the SISP procedures. Bank of Montreal entered 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 loyalty program to approximately 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 facility with 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.
