Shutterfly - Exchange & Consent Offer - Results

Shutterfly Announces Early Tender Results of the Exchange Offer and Consent Solicitation Relating to 8.50% First-Priority Senior Secured Notes due 2026

06 JUNE 2023

Full announcement including disclaimers and offer restrictions available via Businesswire (Source: Shutterfly, LLC)

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"As of 5:00 p.m., New York City time, on June 5, 2023 (the “Early Participation Time”), the New Issuer received from eligible holders valid and unwithdrawn tenders and related consents, as reported by Epiq Corporate Restructuring, LLC (“Epiq”), the transaction agent, representing $729,376,000 million in aggregate principal amount of Existing Notes (or 97.25% of the outstanding Existing Notes). The final results are subject to confirmation from Epiq of receipt of each of the required Cash Payments (as defined below). The New Issuer has elected to provide for an “early settlement” with respect to the Existing Notes validly tendered for exchange (and not validly withdrawn) at or prior to the Early Participation Time and for which the related Cash Payment has been delivered at or prior to the Early Funding Date (as defined below) and expects to settle the Exchange Offer with respect to such Existing Notes and the related Cash Payment on June 9, 2023 (the “Early Settlement Date”).

In addition, as of the Early Participation Time, the New Issuer received the requisite number of consents in the concurrent consent solicitation (the “Consent Solicitation”) from holders of the Existing Notes (the “Consenting Noteholders”) to adopt the proposed amendments (the “Proposed Amendments”) to the indenture governing the Existing Notes (the “Existing Notes Indenture”) to eliminate substantially all of the restrictive covenants in the Existing Notes Indenture and make certain other changes. As a result, the New Issuer expects to enter into a supplemental indenture (the “Supplemental Indenture”) to give effect to the Proposed Amendments on or about June 7, 2023. The Supplemental Indenture will become effective upon execution, but the Proposed Amendments therein will not become operative until the New Issuer accepts for purchase Existing Notes representing the Requisite Consents (as defined in the Offering Memorandum) in the Exchange Offer. The Proposed Amendments are expected to become operative on the Early Settlement Date.

The following table sets forth the total consideration (the “Total Consideration”) per $1,000 principal amount of Existing Notes if validly tendered at or prior to the Early Participation Time and the exchange consideration (the “Exchange Consideration”) per $1,000 of Existing Notes if validly tendered after the Early Participation Time but at or prior to the Expiration Time and accepted for exchange in the Exchange Offer:"

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Shutterfly Announces Exchange Offer and Consent Solicitation Relating to 8.50% First-Priority Senior Secured Notes due 2026 as Part of Broader Refinancing Transactions

15 MAY 2023

Full announcement including disclaimers and offer restrictions available via Businesswire

"SAN JOSE, Calif.--(BUSINESS WIRE)--Shutterfly, LLC (the “Company,” “we,” “our” and “us”) today announced the launch of a debt exchange offer and consent solicitation for eligible noteholders, as detailed below. Pursuant to a Transaction Support Agreement entered into by the Company and consenting noteholders and lenders, including JP Morgan Asset Management, Sixth Street, and other institutional investors, who represent approximately 74% of the aggregate principal amount of Existing Notes and more than 80% of the aggregate principal amount of Existing Term Loans (each, as defined below), the Exchange Offer (as defined below) will be offered pro rata to all eligible holders of Existing Notes, and the Company intends to consummate a similar exchange with respect to its Existing Term Loans (as set forth in more detail below).

As a result of the Refinancing Transactions (as defined below), the Company expects to raise approximately $200 million of additional debt financing, extend existing debt maturities, and meaningfully improve liquidity. The Refinancing Transactions support the Company’s ability to expand its position as a leading e-commerce provider of personalized merchandise.

“We are pleased to announce this agreement with the broad support of our lenders and Apollo, which reflects their constructive dialogue throughout this process, as well as their confidence in our market position and the opportunities ahead. This step will strengthen our financial foundation and support our long-term strategic plans by enabling us to continue implementing key growth initiatives,” said Sally Pofcher, Chief Executive Officer of the Company.

A representative of the consenting noteholders that led the negotiation with Apollo and the Company said, “We are pleased that this transaction extends the same treatment to all the Company’s lenders, tightens credit documentation, and provides Shutterfly runway to pursue its growth objectives.”

Exchange and Consent Solicitation Details

Shutterfly Finance, LLC, a subsidiary of the Company (the “New Issuer” or “New Borrower”), has commenced an offer to eligible holders of the Company’s 8.50% First-Priority Senior Secured Notes due 2026 (the “Existing Notes”) to exchange (the “Exchange Offer”) any and all of the outstanding Existing Notes, together with a required cash payment (as described below), for, at the option of each eligible holder of Existing Notes, either (1) new 9.75% First-Priority Senior Secured Notes due 2027 (the “New 1L Notes”) of the New Issuer and new 8.50% Second-Priority Senior Secured Cash/PIK Notes due 2027 (the “New 2L Notes”) of the New Issuer (the “First Option Consideration”) OR (2) new first lien terms loans of the New Borrower under a new first lien credit agreement (such term loans, the “New First Lien Term Loans” and such credit agreement, the “New First Lien Credit Agreement”) and New 2L Notes (the “Second Option Consideration”). An eligible participant may elect to receive First Option Consideration or Second Option Consideration with respect to all of the Existing Notes such participant tenders in the Exchange Offer or such participant may elect to receive First Option Consideration with respect to a portion of the Existing Notes tendered and Second Option Consideration with respect to the remaining portion of Existing Notes tendered (in each case, subject to the terms of the Exchange Offer).

Concurrently with the Exchange Offer, the New Issuer commenced a consent solicitation (the “Consent Solicitation”) whereby the New Issuer is soliciting consents (“Consents”) from eligible holders of the Existing Notes to certain proposed amendments (the “Proposed Amendments”) to the indenture governing the Existing Notes (the “Existing Notes Indenture”) to eliminate substantially all of the restrictive covenants in the Existing Notes Indenture and make certain other changes. Eligible holders may not deliver Consents without participating in the Exchange Offer and eligible holders may not participate in the Exchange Offer without delivering the related Consents. Promptly following the Early Participation Time (as defined below), if holders of at least a majority of the outstanding principal amount of Existing Notes (excluding Existing Notes held by the Company and its affiliates) consent to the Proposed Amendments (the “Requisite Consents”), the Company and the trustee (the “Existing Trustee”) under the Existing Notes Indenture will enter into a supplemental indenture with respect to the Existing Notes Indenture (the “Supplemental Indenture”) to give effect to the Proposed Amendments. The Supplemental Indenture will be a valid, binding and enforceable agreement when it is executed and delivered by the Company and the Existing Trustee, which may be promptly following the Early Participation Time if the Requisite Consents have been received by such time. The Proposed Amendments will not become operative unless and until Existing Notes representing at least the Requisite Consents are validly tendered (and not validly withdrawn) and accepted for exchange pursuant to the Exchange Offer.

The following table sets forth the total consideration (the “Total Consideration”) per $1,000 principal amount of Existing Notes if validly tendered at or prior to the Early Participation Time and the exchange consideration (the “Exchange Consideration”) per $1,000 of Existing Notes if validly tendered after the Early Participation Time but at or prior to the Expiration Time and accepted for exchange in the Exchange Offer:"

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"(1) There is currently $750.0 million in outstanding aggregate principal amount of Existing Notes (CUSIP Nos. 719245 AD4 (144A) and U7189A AB8 (Regulation S)), including Existing Notes held by affiliates of the Company. Eligible holders must validly tender (and not validly withdraw) all of such holder’s Existing Notes to participate in the Exchange Offer. Partial tenders of Existing Notes will not be accepted. CUSIP information is provided for the convenience of noteholders. No representation is made as to the correctness or accuracy of such numbers.

(2) For each $1,000 principal amount of Existing Notes validly tendered (and not validly withdrawn), a participating eligible holder must deliver a cash payment of $109.11 (the “Cash Payment”) by the applicable Funding Date (as described below). The Cash Payment required to be paid by each participating eligible holder will be rounded down to the nearest $1.00.

(3) Eligible holders will only be eligible to receive the Total Consideration if they (i) validly tender (and do not validly withdraw) their Existing Notes and deliver the related Consents at or prior to the Early Participation Time and (ii) validly deliver the related Cash Payment at or prior to the Early Funding Date. The Total Consideration is inclusive of the Exchange Consideration.

(4) The principal amount of New 1L Notes issued to each participating eligible holder electing First Option Consideration, similar to the Cash Payment paid by each participating eligible holder, will be rounded down to the nearest $1.00. Accordingly, the principal amount of New 1L Notes issued to each participating eligible holder electing First Option Consideration will be equal to the Cash Payment paid by such participating eligible holder, and the principal amount of New 1L Notes issued to any participating eligible holder will be in increments of $1.00.

(5) Holders of Existing Notes that are accepted for exchange pursuant to the Exchange Offer will be entitled to receive accrued and unpaid interest in cash on such Existing Notes up to, but excluding, the initial Settlement Date (as defined below). In the event that we elect to settle Existing Notes tendered prior to the Early Participation Time prior to the Expiration Time (as defined below), eligible holders who tender after the Early Participation Time will not receive interest on such Existing Notes that accrues from the initial Settlement Date to the final Settlement Date.

(6) An eligible participant may elect to receive First Option Consideration or Second Option Consideration with respect to all of the Existing Notes such participant tenders in the Exchange Offer or such participant may elect to receive First Option Consideration with respect to a portion of the Existing Notes tendered and Second Option Consideration with respect to the remaining portion of Existing Notes tendered (in each case, subject to the terms of the Exchange Offer).

(7) The principal amount of New First Lien Term Loans allocated to each participating eligible holder electing Second Option Consideration, similar to the Cash Payment paid by each participating eligible holder, will be rounded down to the nearest $1.00. Accordingly, the principal amount of New First Lien Term Loans allocated to each participating eligible holder electing Second Option Consideration will be equal to the Cash Payment paid by such participating eligible holder, and the principal amount of New First Lien Term Loans allocated to any participating eligible holder will be in increments of $1.00. In order to be eligible to receive the Second Option Consideration, a participating eligible holder must complete and deliver to Epiq (as defined below) the New Lender Documentation (as described in the Offering Memorandum (as defined below)) no later than 11:00 p.m., New York City time, on the Early Participation Time or Expiration Time, as applicable."

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