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

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

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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.

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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.

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