99 Cents Only Stores LLC’s recent deal with its backers and creditors will shave off a large chunk of debt and bolster the cash on its balance sheet, WSJ Pro Bankruptcy reported. Private-equity owners Ares Management Corp. and the Canada Pension Plan Investment Board have engineered two debt-restructuring pacts in as many years for the discount retailer they purchased in 2012. As part of the deal, Ares made a $34 million cash infusion in the retailer that will be used to pay down some of the company’s third-lien bonds and to bolster the company’s liquidity, the person also said. The deep-discount retailer remains profitable, but profit margins are under pressure from competition from larger discount retailers and Amazon.com Inc. The company embarked on a debt-restructuring deal to lighten its debt load, the person familiar with the matter added. 99 Cents generates about $85 million in annual earnings before interest, taxes, depreciation and amortization, the person added. Rating company Standard & Poor’s Global Rating cut 99 Cents’ rating three notches Friday to CC, citing the deal converting its second-lien term loans and secured bonds to equity.
