Party City (NYSE:PRTY) is seeing massive gains to PRTY stock Friday following news of a deal with bondholders.
According to a Party City news release, the company is planning a Transaction Support Agreement (TSA) with more than 52% of bondholders for 6.125% of the senior notes due in 2023 and 6.625% of senior notes due in 2026. It also includes existing notes due in 2023.
Party City says that the TSA will have it freeing up roughly $450 million from its balance sheet. To go along with this, the company is planning to raise $100 million that will allow it to strengthen its financial position and help fund transformation efforts.
Party City notes that the TSA will have it exchanging the 2023 and 2026 senior notes for shares of common stock. It also includes $100 million of 10% senior secured notes due in 2026 and $185 million in variable-rate senior secured notes due in 2025.
At the same time as the TSA, the company plans to introduce a rights offering. This offering 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.”
Brad Weston, CEO of Party City, said this about the news.
“The agreement announced today demonstrates the confidence of certain of our bondholders in our strategy and leadership team, and we appreciate their support for our long-term success. 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.”
PRTY stock was up 28.9% as of Friday afternoon.