Party City plans debt swap

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Party City plans debt swap

By Marianne Wilson - 06/01/2020

Party City Holdco Inc. is hoping to erase about half of its debt.

The retailer has proposed a debt-for-equity swap with bondholders that would erase about $450 million of its approximately $850 million debt. In addition, Party City is planning to raise $100 million in new capital to increase its financial strength and help fund the company’s global operations and ongoing transformation initiatives.

The deal would give the bondholders a 19.9% equity interest in the retailer, along with two new bond issues totaling $285 million, with maturity dates in 2025 and 2026

“The transactions set out in this agreement deliver value to our stockholders and provide Party City a path to a significantly strengthened financial foundation as we continue to navigate the current macroeconomic challenges and implement our ongoing transformation initiatives,” stated CEO Brad Weston. 

Party City plans to introduce a rights offering. It will include the right to purchase a pro-rata portion of $50.0 million aggregate principal amount of 15.00% senior secured notes due 2025.

Party City’s retail operations include approximately 875 specialty retail party supply stores (including franchise stores) throughout North America operating under the names Party City and Halloween City, and e-commerce websites.

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