Party City in bond deal that could slash debt; loss widens to $541.5 million
Party City Holdco Inc. is working to ease its debt as it continues to deal with retail fallout from COVID-19.
The party goods retailer announced a possible deal that would reduce the company's debt by 25% — or about $450 million — and raise $100 million in capital.
"[T]o support our ongoing transformation initiatives, we recently announced an agreement with certain of our bondholders to support a set of transactions that, if consummated, is expected to reduce the company's debt by over 25% and raise approximately $100 million in new capital," stated CEO Brad Weston. The deal would be with 54% of holders of Party City's 6.125% senior notes due 2023 and 6.625% senior notes due 2026.
The retailer posted net losses of $541.5 million, or $5.80 per share, for the quarter ended compared to a net loss of $30.2 million, or $0.32 per share, last year. Adjusted losses were $0.28 per share.
Revenue fell 19.3% to $414.0 million. Same-store sales fell 17.1%. North American e-commerce sales were down 15.4%.
Party City began to reopen stores on May 1. As of June 12, more than 85% of its locations had reopened, with COVID-19 related safety measures such as signage to encourage social distancing, restricted store capacity and enhanced sanitization protocols.
For the remainder of 2020, the company will close 21 stores and open two new locations. The planned openings of an additional 10 stores have been moved to 2021.
Party City’s retail operations include approximately 850 stores throughout North America operating under the names Party City and Halloween City.