Party City units default as grace period ends; creditors talks ongoing

By Sarah Lizee

Olympia, Wash., Sept. 21 – Party City Holdco Inc. subsidiaries Anagram Holdings, LLC and Anagram International, Inc. didn’t pay the interest due on their 15% PIK/cash senior secured first-lien notes due 2025 during the 30-day grace period, causing an event of default under the notes on Sept. 15, according to an 8-K filed with the Securities and Exchange Commission.

As previously reported, the issuers elected to not make the August interest payment on the notes.

A forbearance agreement that was entered with both a majority of the holders of their first-lien notes and a majority of the holders of their 10% PIK/cash senior secured second-lien notes due 2026 has been terminated.

The event of default has caused cross defaults under the second-lien notes and Anagram’s ABL credit agreement.

The Anagram issuers said they are currently in active dialogue with their noteholders and lenders to address the events of default, and are currently in discussions with holders of a majority of their first-lien notes and second-lien notes regarding deleveraging and financing transactions.

Party City is not a party to, or liable under, the Anagram issuers’ debt agreements, and the events of default don’t impact Party City’s debt agreements or access to liquidity.

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, 2023 under Chapter 11 case number 23-90005.

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