Party City Holdco Inc., already weighed down by debt before closing its stores in March in response to the coronavirus pandemic, is floating a debt-for-equity swap with bondholders that would erase millions in debt from its balance sheet, WSJ Pro Bankruptcy reported. The retail chain, based in Elmsford, N.Y., said on Friday that the proposed deal, which also includes a plan to raise $100 million in new capital, would cut about $450 million from its roughly $850 million debt load. Brad Weston, Party City’s chief executive, said the proposed deal would allow the chain to navigate the challenges facing retailers during the pandemic. Party City began reopening some of its more than 800 stores earlier this month. Under the deal, bondholders would receive a 19.9 percent equity stake in Party City plus $100 million in new 10% bonds due 2026 and $185 million in variable-rate bonds maturing in 2025. Party City said holders of 52 percent of bonds maturing in 2023 and 2026 have signed onto the deal. The company needs holders of 98 percent of bonds, or about $833 million of the debt outstanding, to agree to the proposal to complete the transaction.
