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Party City bonds hold levels in trading after IPO plans unveiled

party cityBonds backing party-store chain Party City more or less held levels today after the company filed IPO plans, sources said. PC Nextco Holdings 8.75% PIK toggle notes due 2019 traded in a 104/105 context, with another market at 103.75/104, sources said. The company’s 8.875% notes due 2020 – a $700 million issue sold as part of the 2012 buyout of the company – were at 112/112.25 after the news, also largely unchanged.

The company plans to raise $500 million via the IPO, a Jan. 21 SEC filing showed. Shares will be listed under the ticker “PRTY.” Proceeds will repay debt and fund working capital and other general corporate purposes.

In July, Party City issued $350 million of 8.75% notes, which pay 9.5% during PIK, via joint bookrunners Bank of America, Deutsche Bank, Barclays, Goldman Sachs, Morgan Stanley, and Moelis. Proceeds funded a dividend.

The notes include an unusual equity-clawback window from 6-18 months after issuance for either up to 40% of the issue or the whole issue at 102% of par.

In 2012, Thomas H. Lee Partners completed a $2.69 billion purchase of a majority stake in the party-supply retailer. After the buyout, Thomas H. Lee Partners owns roughly 70%, and funds affiliated with Advent International Corporation own roughly 24%. Other minority investors, including management, own roughly 6%. – Abby Latour

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