Party City receives final approval of $150 million DIP financing

By Sarah Lizee

Olympia, Wash., March 3 – Party City Holdco Inc. received final approval of $150 million in debtor-in-possession financing, according to an order filed Friday with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, the DIP financing is part of a restructuring support agreement with an informal group of holders of more than 70% of Party City Holdings Inc.’s $161.7 million senior secured first-lien floating-rate notes due 2025 and Party City Holdings’ $750 million 8¾% senior secured first-lien notes due 2026.

Notes trustee Ankura Trust Co., LLC is administrative and collateral agent on the DIP facility.

Interest is SOFR plus 1,000 basis points, subject to a SOFR floor of 1%.

There is an 8% commitment premium.

Each backstop lender will get either payment of a fee equal to 10% of the term loans held by the lender outstanding on the termination date in cash, or in the event that a plan of reorganization is pursued and completed, conversion of all or a portion of the term loans into reorganized securities at a price equal to the rights offering price.

There is also a delayed-draw unused line fee of 0.5% per annum.

The facility is set to mature on June 19, or, in return for payment in kind of an extension premium of 3% of principal amount of term loans outstanding, July 19. Certain other events may cause an earlier maturity, such as emergence from Chapter 11, or the closing of a sale.

Proceeds will be used to pay the administrative costs of the Chapter 11 cases and the facility and for general corporate purposes.

The company also got final approval to use cash collateral.

Party City is a Woodcliff Lake, N.J.-based supplier of decorated party goods available at more than 800 stores and online. The company filed bankruptcy on Jan. 17 under Chapter 11 case number 23-90005.

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