PetSmart reportedly hires advisors in effort to trim debt
PetSmart is the latest highly-leveraged — and sales challenged — retailer to be struggling under debt accumulated in a private equity buyout.
The pet supplies retailer has hired investment bank Houlihan Lokey Inc. to help it explore way to trim its debt load of more than $8 billion, reported Reuters. BC Partners Inc. acquired PetSmart for $8.7 billion in 2014. Since then, the retailer has faced increased competition, especially online. Amazon has been turning up the heat, launching its own private-label pet food line under the Wag label. To beef up its digital offerings, PetSmart acquired its fast-growing online rival, Chewy, in April 2017 for $3.35 billion, which added another $2 billion to the chain’s debt load.
PetSmart recently transferred over a third of Chewy.com’s equity to separate entities, putting the stake out of creditors’ reach. The move is similar to asset transfers undertaken by other debt-distressed retailers, which have created subsidiaries to hold assets, protecting them from creditors.
The pet supplies retailer has hired investment bank Houlihan Lokey Inc. to help it explore way to trim its debt load of more than $8 billion, reported Reuters. BC Partners Inc. acquired PetSmart for $8.7 billion in 2014. Since then, the retailer has faced increased competition, especially online. Amazon has been turning up the heat, launching its own private-label pet food line under the Wag label. To beef up its digital offerings, PetSmart acquired its fast-growing online rival, Chewy, in April 2017 for $3.35 billion, which added another $2 billion to the chain’s debt load.
PetSmart recently transferred over a third of Chewy.com’s equity to separate entities, putting the stake out of creditors’ reach. The move is similar to asset transfers undertaken by other debt-distressed retailers, which have created subsidiaries to hold assets, protecting them from creditors.