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Alliance Data Systems Plans To Spin Off LoyaltyOne Segment

Alliance Data Systems Corp. (ADS) said that it plans to spin off its LoyaltyOne segment. The segment comprises Canadian AIR MILES Reward Program and Netherlands-based BrandLoyalty business.

The spinoff is expected to be tax-free, resulting in two independent, U.S.-based, publicly traded companies, Alliance Data and "Spinco."

The transaction will be in the form of a distribution to Alliance Data stockholders of about 81% of the shares of Spinco.

Immediately following the transaction, Alliance Data stockholders will own shares of both companies, with Alliance Data retaining a minority stake in Spinco. At the time of the spinoff, Spinco expects to complete a debt financing and dividend the net proceeds to Alliance Data.

Alliance Data will use all of the net proceeds to retire a portion of its corporate debt.

Alliance Data will retain approximately 19% of the shares of Spinco at the time of the distribution, with the intent to monetize that stake as appropriate to provide for incremental corporate debt reduction at Alliance Data.

Alliance Data expects the spinoff to be completed by the end of the year.

Upon completion of the spinoff, Charles Horn, currently executive vice president and senior advisor, Alliance Data, will be named chief executive officer of Spinco.

Blair Cameron and Claudia Mennen will continue to lead AIR MILES and BrandLoyalty, respectively. The remainder of the Spinco leadership team and board of directors will be announced over the next several months.

Alliance Data said it continues to execute successfully on its multi-year transformation strategy to streamline its operations, while strategically investing in the Card Services business, as well as outsourcing its core processing platform.

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