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Party City: Thoughts on Bankruptcy Filing
Jory M. Eisenberg - Senior Analyst - Special Situations
EXECUTIVE SUMMARY
- We are updating our recommendations on Party City. Our sister company LFI will provide ongoing coverage of key developments throughout the Chapter 11 process. We remain available to discuss any investor inquiries regarding the restructuring process, however.
- Party City announced on January 17th it had filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. The Anagram business in addition to certain international subsidiaries are expressly excluded from the Chapter 11 process.
- The Company has entered into a Restructuring Support Agreement with an ad hoc group of creditors consisting of Cap Re, Davidson Kempner, Monarch and Silver Point who collectively control 84% of the senior secured notes. The RSA contemplates full equitization of the senior secured notes while the ABL would either be paid out in cash at exit or replaced with a post-petition ABL facility.
- While specific bankruptcy plan details have not yet been provided, we attempt to frame potential recoveries for creditors based on the information currently filed in the Chapter 11 docket. We project creditor recoveries with an assumed EBITDA range for each of Anagram and PRTY (ex Anagram) between management’s FY2023 and FY2024 projections.
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