Please ensure Javascript is enabled for purposes of website accessibility

Party City Announces Bond Deal to Raise $100 Million and Cut Debt 25%

By Rich Duprey – Jun 12, 2020 at 9:08AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The agreement will help the party supplies retailer implement its turnaround plan.

Party City Holdco (PRTY 4.07%) reported first-quarter earnings that were as bad as one could expect during the coronavirus pandemic, but said it had negotiated a deal with some of its bondholders to raise $100 million while simultaneously cutting its debt load by 25%.

The party supplies retailer saw its stock lose 40% of its value over the past three trading days, dropping 24% just on Thursday. But in pre-market trading on Friday after announcing the deal, shares of Party City were soaring 30% higher.

Group of people releasing balloons

Image source: Getty Images.

Get the party started

The company said it closed all of its stores on March 18 and launched a curbside pickup initiative a week later. But revenue dropped 19% to $414 million and comparable-store sales collapsed 17% for the period.

E-commerce comps also declined by more than 15%, but when adjusted for the curbside pickup, delivery, and buy online-pickup in store programs, comps were down just 6.9%.

Party City reported a GAAP net loss of $541.5 million, or $5.80 per share, though on an adjusted basis, the loss was $26.4 million, or $0.28 per share, compared with profits of $1.1 million, or $0.01 per share, last year.

What apparently has investors in a party mood was Party City's deal with 54% of its lenders that hold the company's 6.125% senior notes due in 2023 and 6.625% senior notes due in 2026. The agreement, which was first announced on May 28, would deleverage the balance sheet by approximately $450 million while raising $100 million in new capital.

Party City's stock still trades 82% below its 52-week high hit last November, just before it reported disastrous third-quarter results that resulted in the stock losing 60% of its value in one day.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Party City Holdco Inc. Stock Quote
Party City Holdco Inc.
$1.79 (4.07%) $0.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.