Shutterfly announces early tender offer results for exchange offer

Below are the details of the announcement:

SAN JOSE, Calif.–(BUSINESS WIRE)–Shutterfly, LLC (the “Company,” “we,” “our” and “us”) today announced the early tender results of the previously announced offer (the “Exchange Offer”) by Shutterfly Finance, LLC, a subsidiary of the Company (the “New Issuer” or “New Borrower”), to exchange any and all of the Company’s outstanding 8.50% First-Priority Senior Secured Notes due 2026 (the “Existing Notes”), together with a required cash payment (as described below), for, at the option of the holder, 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 New 2L Notes (the “Second Option Consideration”), in each case, subject to the terms and conditions of the offering memorandum and consent solicitation statement dated May 15, 2023 (as supplemented or otherwise modified from time to time, the “Offering Memorandum”).

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to provide for an “early settlement” with respect to the Existing Notes validly tendered for exchange (and not validly withdrawn) at or prior to the Early Participation Time and for which the related Cash Payment has been delivered at or prior to the Early Funding Date (as defined below)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:

Consideration to be Tendered by Participating Eligible Holders		Total Consideration to be Received by Participating Eligible Holders (per $1,000 Principal Amount of Existing Notes Tendered at or Prior to the Early Participation Time)(3)		Exchange Consideration to be Received by Participating Eligible Holders (per $1,000 Principal Amount of Existing Notes Tendered After the Early Participation Time but at or Prior to the Expiration Time)
All of such Holder’s 8.50% First-Priority Senior Secured Notes due 2026 plus delivery of a Cash Payment Equal to $109.11 per $1,000 principal amount of Existing Notes Tendered(1)(2)		First Option: (i) $109.11 principal amount of New 1L Notes(4) plus (ii) $900 principal amount of New 2L Notes(5)(6) OR Second Option: (i) $109.11 principal amount of New First Lien Term Loans(7) plus (ii) $900 principal amount of New 2L Notes(5)(6)		First Option: (i) $109.11 principal amount of New 1L Notes(4) plus (ii) $870 principal amount of New 2L Notes(5)(6) OR Second Option: (i) $109.11 principal amount of New First Lien Term Loans(7) plus (ii) $870 principal amount of New 2L Notes(5)(6)

(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 are only eligible to receive the Total Consideration if they (i) validly tendered (and did not validly withdraw) their Existing Notes and delivered the related Consents (as defined in the Offering Memorandum) at or prior to the Early Participation Time and (ii) validly delivered the related Cash Payment at or prior to 5:00 p.m., New York City time, on June 6, 2023 (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 Early Settlement Date. Eligible holders who tender after the Early Participation Time will not receive interest on such Existing Notes that accrues from the Early Settlement Date to the Final Settlement Date (as defined below).
(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 the New Lender Documentation (as described in the Offering Memorandum) no later than 11:00 p.m., New York City time, on the Early Participation Time or Expiration Time, as applicable.

As of 5:00 p.m., New York City time, on June 5, 2023, the right to withdraw tenders of Existing Notes and related consents expired. Accordingly, Existing Notes tendered for exchange may not be validly withdrawn and consents may no longer be revoked, unless required by applicable law, or the New Issuer determines in the future and in its sole discretion to permit withdrawal and revocation rights.

The Exchange Offer and Consent Solicitation will expire at 5:00 p.m., New York City time, on June 14, 2023, unless extended or earlier terminated (the “Expiration Time”). Eligible holders who tender their Existing Notes after the Early Participation Time but at or prior to the Expiration Time must deliver the Cash Payment at or prior to 5:00 p.m., New York City time, on June 15, 2023 (such date and time, as the same may be extended, the “Funding Date”). Subject to the satisfaction or waiver of the respective conditions, the Exchange Offer for any Existing Notes validly tendered (and not validly withdrawn) after the Early Participation Time but prior to the Expiration Time is expected to settle on the third business day after the Funding Date (the “Final Settlement Date”).

Consummation of the Exchange Offer and the Consent Solicitation is conditioned upon the satisfaction or waiver of the conditions set forth in the Offering Memorandum.

The Exchange Offer is being made, and the New 1L Notes and the New 2L Notes, are being offered, and will be issued only: (i) to holders of Existing Notes who are (x) reasonably believed to be “qualified institutional buyers” (as defined in Rule 144A under the Securities Act of 1933 (the “Securities Act”)) or (y) institutional “accredited investors” within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act and (ii) outside the United States, to holders of Existing Notes who are not “U.S. persons” (as defined in Rule 902 under the Securities Act) in reliance on Regulation S of the Securities Act. The holders of Existing Notes who are eligible to participate in the Exchange Offer pursuant to at least one of the foregoing conditions are referred to as “eligible holders.”

The New Issuer is making the Exchange Offer and the Consent Solicitation only to eligible holders through, and pursuant to, the terms of the Offering Memorandum. The complete terms and conditions of the Exchange Offer are set forth in the Offering Memorandum. None of the Company, the New Issuer, the Guarantors (as defined in the Offering Memorandum), Epiq or any other person takes any position or makes any recommendation as to whether or not eligible holders should participate in the Exchange Offer or deliver Consents pursuant to the Consent Solicitation.

Only eligible holders may receive a copy of the Offering Memorandum and participate in the Exchange Offer and the Consent Solicitation. Holders of Existing Notes wishing to certify that they are eligible holders in order to be eligible to receive a copy of the Offering Memorandum should complete the eligibility letter and return it to Epiq as directed therein. Holders of Existing Notes may complete the eligibility letter on-line or obtain a PDF copy of the eligibility letter by following the link at https://epiqworkflow.com/cases/ShutterflyEL. The eligibility letter can be returned via the online portal or by emailing a scan of both pages of the fully completed letter to Epiq at [email protected] and referencing “Shutterfly” in the subject line. Once your response has been reviewed and cleared by Epiq, you will receive the Offering Memorandum from Epiq by email.

This communication is for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, any security and does not constitute an offer, solicitation or sale of any security in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Exchange Offer is being made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, has not been registered with the SEC and relies on exemptions under state securities laws.