CPI Card Group Inc. Announces Closing of Private Offering of $310 Million of Senior Secured Notes and Entry into $50 Million ABL Revolver

Rhea-AI Summary

CPI Card Group Inc. (OTCQX: PMTS; TSX: PMTS) announced the closing of a private offering of $310 million senior secured notes due 2026, featuring an interest rate of 8.625%. The funds will be used to fully repay existing credit facilities, along with additional cash and borrowings from a new secured asset-based revolving credit facility. These notes are secured by the issuer's and certain subsidiaries' assets and sold under Rule 144A of the Securities Act. The offering aimed at qualified institutional buyers and is not registered under the Securities Act.

Positive

• Funds from the $310 million notes will fully repay existing credit facilities, improving debt management.
• The new secured asset-based revolving credit facility of $50 million provides additional liquidity.

Negative

• The issuance of new debt may lead to potential dilution of shares if the company faces repayment issues.
• The 8.625% interest rate on the notes is relatively high, indicating increased borrowing costs.

CPI Card Group Inc. (OTCQX: PMTS; TSX: PMTS) (“CPI” or the “Company”) today announced the closing of the previously announced private offering by its wholly-owned subsidiary, CPI CG Inc. (the “issuer”), of $310 million aggregate principal amount of its 8.625% senior secured notes due 2026 (the “notes”) and related guarantees.

The issuer used the net proceeds from the offering, together with $22.8 million cash on hand and $15 million of initial borrowings under a $50 million secured asset based revolving credit facility that it entered into concurrently with the issuance of the notes (the “ABL revolver”), to repay in full and terminate its existing credit facilities and to pay related fees and expenses.

The notes are general senior secured obligations of the issuer and guaranteed by the Company and certain of its current and future wholly-owned domestic subsidiaries (other than the issuer) that guarantee the ABL revolver, and are secured by substantially all of the assets of the issuer and the guarantors, subject to customary exceptions.

The notes and related guarantees were offered only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), or outside the United States to certain non-U.S. persons in compliance with Regulation S under the Securities Act. The issuance and sale of the notes and related guarantees have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction, and the notes and related guarantees may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and other applicable securities laws.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the notes and related guarantees. Offers of the notes and related guarantees were made only by means of a private offering memorandum, and are not being made to any person in any jurisdiction in which such offer, sale or solicitation is unlawful.

About CPI Card Group Inc.

CPI Card Group^® is a payment technology company and leading provider of credit, debit and prepaid solutions delivered physically, digitally and on-demand. CPI helps our customers foster connections and build their brands through innovative and reliable solutions, including financial payment cards, personalization, and Software-as-a-Service (SaaS) instant issuance. CPI has more than 20 years of experience in the payments market and is a trusted partner to financial institutions and payments services providers. Serving customers from locations throughout the United States, CPI has a large network of high security facilities, each of which is registered as PCI compliant by one or more of the payment brands: Visa, Mastercard^®, American Express^® and Discover^®.

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FAQ

What is the purpose of CPI Card Group's $310 million note offering?

The $310 million notes will be used to repay existing credit facilities and associated fees.

What is the interest rate on CPI Card Group's senior secured notes?

The senior secured notes have an interest rate of 8.625%.

Who are the investors eligible to buy the CPI Card Group notes?

The notes were offered only to qualified institutional buyers under Rule 144A of the Securities Act.

What is the maturity date for CPI Card Group's senior secured notes?

The notes are due in 2026.

How will CPI Card Group secure the notes?

The notes are secured by substantially all of the assets of the issuer and certain subsidiaries.