Neiman Marcus restructuring sees MyTheresa stake for noteholders

Neiman Marcus has reached an agreement in principle with its creditors on the terms of a restructuring deal that the company said would provide it with a three-year runway to “execute on and complete its transformation plan into a customer-centric luxury platform,” including a partial pay-down of the company’s term loan, an extension of remaining term loan debt, and the distribution of a preferred equity stake in the contested MyTheresa unit to unsecured bondholders pursuant to a notes exchange.

The troubled retailer, represented by Lazard and Moelis, ironed out an amend-to-extend transaction to lengthen the maturity of its $2.8 billion covenant-lite B term loan due October 2020 (L+325, 1% LIBOR floor)—its first large maturity—by three years, to 2023, according to cleansing documents filed with the SEC to lift trading restrictions.

Under the deal, lenders have the option to extend into one of two tranches paying either L+650 or L+550/100 PIK. Both carry a 1.5% LIBOR floor.

A $550 million partial pay-down of the term loan, meanwhile, would be funded by new second-lien notes that would be collateralized by a partial guarantee from MyTheresa of $200 million. The new second-lien notes would pay 8% cash/6% PIK and mature in April 2024.

The issuer also has the option to propose up to $250 million of additional par pay-downs from real estate transactions, subject to a majority term lender vote. Further amendments to the term loan that tighten a series of covenants related to debt baskets would also place limitations on dealings with MyTheresa.

A 125 bps fee would be paid in cash upon closing of the transaction to those lenders that agree to non-disclosure agreements through and sign on to a restructuring support agreement by March 12, while a 25 bps fee would be paid to term lenders that sign on to the RSA within five days of the announcement of the execution of the agreement.

Unsecured noteholders would exchange $250 million into a par amount of MyTheresa 10% cumulative preferred equity, with the balance of their holdings exchanged into new third-lien notes due 2024, along with a first-lien on PropCo assets and a first-lien on 50% of MyTheresa common equity.

The restructuring sets out a waterfall payment plan for MyTheresa that places the $200 million reserve for the second-lien notes guarantee first, followed by $250 million for the preferred equity issued to exchanging noteholders, $250 million for preferred equity issued to sponsors, and lastly common equity, with 100% of the proceeds from the unsecured noteholders’ share of the common equity used to pay down the third-lien notes at par.

The agreement was reached with an ad-hoc committee of holders of the company’s unsecured 8.750%/9.500% senior PIK toggle notes due 2021, and the company’s unsecured 8.000% senior cash-pay notes due 2021, as well as an ad hoc committee of term loan lenders. The agreement is subject to the completion of all documentation, the company said, adding that all term loan lenders and all but one of its noteholders in those ad hoc groups have agreed to extend confidentiality agreements through March 12, with the one dissenter’s objection based on naming Neiman Marcus Group LLC as a co-issuer of the company’s debt, rather than a substantive objection to the terms of the transaction.

The bondholder group is working with Houlihan Lokey as financial adviser, filings show.

Neiman also disclosed that it expects to report an increase in comparable revenue on a U.S. basis of 0.5% to 1.0% for the second fiscal quarter ending January 2019 from the year-ago period, representing the sixth consecutive quarter of comparable revenue increases. In addition, year-to-date Adjusted EBITDA through the second quarter of fiscal year 2019 is expected to be generally consistent with previously disclosed expectationsThe MyTheresa issue.

The agreement to partially return MyTheresa collateral shows a bit of a U-turn by the issuer, which previously dug its heels in over the luxury fashion brand, a stance that became a point of a contention after the asset was put out of the reach of creditors via a transfer to a subsidiary sitting directly under the parent company.

Distressed investing fund Marble Ridge Capital in December asked a Dallas court to appoint an equity receiver to request the return of the MyTheresa brand after it sent a letter to Neiman’s board in September claiming that the action constituted a default. Neiman Marcus fought back at the claims, filing its own lawsuit for “damages resulting from a series of false statements that Marble Ridge Capital has made publicly about the company,” and requesting the case be dismissed. A judge last month granted Marble Ridge discovery with respect to claims from Marble Ridge that the loan agent blocked the fund from obtaining a position in the debt.

With respect to claims of default, the restructuring could block these objections, according to the term sheets, which require lenders to waive any existing defaults.

Today’s proposed restructuring proposal, however, was not enough to sway Marble Ridge to the company’s side.

“Your [p]roposal’s’ request for bondholders to waive their claims against you and the sponsors arising out of your misconduct is nothing more than a transparent attempt to insulate yourselves from liability,” Marble Ridge said in a statement today. Marble Ridge said it is “confident” that the [court] discovery will confirm the company’s “scheme to strip value away from creditors to benefit out-of- money sponsors.”

Neiman Marcus has $4.3 billion of debt outstanding, including the $2.8 billion covenant-lite B term loan due October 2020 (L+325, 1% LIBOR floor), $659 million of 8.75%/9.5% PIK toggle notes due 2021, and $960 million of 8% cash-pay notes due 2021.

The term loan was marked at 95/96, from 92/93 yesterday. The PIK toggle notes due 2021 rallied seven points, to 59.5. The 8% cash-pay notes due 2021 traded also to 59.5, up 7.5 points. — Rachelle Kakouris

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US Leveraged Loans Returning 0.64% in February, 3.21% YTD

U.S. leveraged loans are following up on their best January since 2009 with a solid February, with the asset classes returning 0.64%, according to the S&P/LSTA Loan Index. Of course, the recent performance follows a dismal December, when loans lost a heart-stopping 2.54% , its worst performance in seven years, amid serious volatility in the equities markets and general unease about the global economic picture.

The loan market has stabilized as retail investors have slowed their retreat from the asset class.

In December, loan mutual funds and ETFs saw roughly $12.2 billion of net withdrawals. That figure lessened to $4.4 billion in January, according to Lipper. While outflows are continuing this month, they’re easing even more. Withdrawals totaled a relatively slim $472 during the week ended Feb. 13, though that was the thirteenth straight outflow for the asset class, per Lipper.

Of note, loan ETFs saw a roughly $246 million inflow last week, the first such movement since early last month.

Another indication of the recent loan market rebound. There’s actual green (denoting a bid for secondary assets) per BAML/Instinct’s leveraged loan market trading platform – Tim Cross

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Leveraged loan funds log record $2.53B outflow

U.S. loan funds reported an outflow of $2.53 billion for the week ended Dec. 12, according to Lipper weekly reporters only. This is the largest weekly outflow on record for loan funds, topping the prior mark of negative $2.12 billion from August 2011.

loan fund flowsThis is also the fourth consecutive week of withdrawals, totaling a whopping $6.63 billion over that span. With that, the four-week trailing average is now deeper in the red than it’s ever been at $1.66 billion, from negative $1.01 billion last week.

Mutual funds were the catalyst in the latest period as investors pulled out a net $1.82 billion, the most since August 2011. Another $704.9 million of outflows from ETFs was the most ever.

Outflows have been logged in six of the last eight weeks and that has taken a big bite out the year-to-date total inflow, which has slumped to $3.7 billion after cresting $11 billion in October.

The change due to market conditions last week was a decrease of $1.231 billion, the largest drop for any week since December 2014. Total assets were roughly $99.3 billion at the end of the observation period and ETFs represent about 11% of that, at roughly $10.9 billion. — Jon Hemingway

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With David’s Bridal Filing, US Leveraged Loan Default Rate Rises stands at 1.61%

The default rate of the S&P/LSTA Leveraged Loan Index now stands at 1.61% by principal amount after David’s Bridal filed for Chapter 11 in bankruptcy court in Delaware.

With Pacific DrillingExGen Texas PowerCumulus Media, and Walter Investment Management all rolling off the 12-month calculation in November, the rate dipped to 1.44% at the beginning of this month, having closed out October at 1.92%.

david's bridalBy issuer count, the rate is now 1.56%, down from 1.79% at the end of October.

It its Disclosure Statement filed this morning, the company cited “challenging bridal retail market conditions,” including increasing competition at the lower price points from online retailers, and its substantial debt burden as reasons behind its decision to seek relief in bankruptcy court.

The filing, which was expected, came after the company announced that a restructuring support agreement had been reached with 85% of its term loan lenders and 97% of its senior noteholders, as well as its principal equity holders, on a deal to reduce the company’s debt by more than $400 million and hand ownership to senior lenders.

Pre-petition term loan lenders, which are expected to recover approximately 70.8%, would get 76.25% of the reorganized equity, while those who participate in the $60 million new-money DIP financing would get an additional 15% of the new equity, court filings show. Holders of its unsecured notes, which have an estimated recovery of 4.4%, would receive around 8.75% of the reorganized equity, in addition to warrants.

The issuer’s originally $520 million covenant-lite TLB was placed in October 2012 to back Clayton, Dubilier & Rice’s acquisition of the retailer from Leonard Green & Partners, which retained a minority stake in the business.

The company said it has sufficient liquidity to meet its business obligations, noting that it has obtained commitments for $60 million in new DIP financing from its current term loan lenders and a recommitment of its existing $125 million ABL revolving credit facility.

A confirmation hearing is set for Jan. 7 ahead of expected emergence from bankruptcy in early January. — Rachelle Kakouris

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Sears Files Ch. 11 with $300M DIP Loan; Lampert Resigns as CEO

Sears Holdings Corp. has filed for Chapter 11 in bankruptcy court in Manhattan, the company announced.

In connection with the filing, Eddie Lampert resigned as the company’s CEO, effective immediately, to be replaced by an “Office of the CEO” to manage the company’s day-to-day operations that is composed of CFO Robert Riecker and retail executives Leena Munjal and Gregory Ladley. Lampert will continue, however, as chairman of the board. In addition, the company has appointed a chief restructuring officer, Mohsin Y. Meghji, who is a managing partner of M-III Partners.

The filing, which was announced in the early morning hours, was expected. Sears had a $134 million debt payment due today on its second-lien debt that it was widely expected to miss, determining the timing, and numerous published reports last week said that Sears had hired boutique advisory firm M-III Partners to help prepare the filing and that the company was seeking DIP financing.

The company said in a news release that it “expects to move through the restructuring process as expeditiously as possible and is committed to pursuing a plan of reorganization in the very near term as it continues negotiations with major stakeholders started prior to today’s announcement.”

In connection with the filing, the company said it had commitments for $300 million in senior priming DIP financing from its senior secured asset-based revolving lenders, and that it was negotiating a $300 million subordinated DIP with hedge fund ESL Investments, the company’s largest stockholder and creditor.

Lampert is ESL’s founder and CEO.

The senior DIP is composed of roughly $189 million in revolving ABL commitments, priced at L+450, with an undrawn commitment fee of 0.75%, and a $111 million term loan subject to a borrowing base formula at L+800, according to bankruptcy court filings. Bank of America is the agent.

The company told vendors that with the DIP funding it would be able to pay them in the ordinary course of business for goods and services provided after today. Pre-petition amounts owed, however, would be repaid in the context of a reorganization plan, although some vendors would receive preferred treatment under the company’s “critical vendor motion.”

According to the court filing, some 200 vendors had stopped shipping merchandise to the company in the past two weeks.

The contemplated junior DIP, meanwhile, would be in an initial amount of $200 million, which could be upsized to $300 million at the discretion of the agent bank (which is to be determined, but will be named by ESL), and would bear interest at L+950. Cyrus Capital would also be a lender under the junior DIP, court filings show (note, however, that while it is included in the company’s DIP approval motion, the junior DIP will not be considered by the court until a second interim hearing, and could be replaced by an alternative financing transaction).

The company said in court filings that it only had a short period of time in which to negotiate the DIP because it first approached lenders only 10 days ago. The company explained that it was hesitant to approach potential lenders too far in advance because of concerns that media focus on the company would cause such inquiries to be become a self-fulfilling prophecy, adding, “In hindsight, those concerns about adverse publicity were well-founded, as discussions regarding debtor in possession financing become the subject to media reports and speculation.”

In any event, the company said its Sears and Kmart stores, along with its online and mobile platforms, are open and continue to offer a full range of products and services to members and customers.

This is significant, as news reports last week said that some of the company’s lenders were pushing for a liquidation of the company.

The company said in a news release that it intends to reorganize around a smaller store platform of EBITDA-positive stores, adding that it is currently in discussions with ESL regarding a stalking-horse bid for the purchase of a large portion of the company’s store base.

The company also said it plans to close 142 unprofitable stores near the end of the year, and that liquidation sales at these locations “are expected to begin shortly.”  The company noted these closings would be in addition to the 46 store closings that the company previously announced.

In court filings, the company said it would reorganize as a “member-centric” business.

More specifically, in terms of a reorganization path, Riecker explained in his first day declaration filed with the bankruptcy court that about 400 of the company’s stores are “four-wall EBITDA positive (before any lease concessions),” and that the company intends to sell “these and other viable stores, or a substantial portion thereof,” as a going concern pursuant to Section 363 of the Bankruptcy Code. These are the stores about which the company is in negotiations with ESL, Riecker said, adding that if a transaction were successful, the result would be “a right-sized version of the company” that not only would save the Sears and Kmart brands, but “the jobs of tens of thousands of employees.”

Additionally, Riecker said the company would market and sell certain non-core assets, such as intellectual property and specialty businesses, to help finance the Chapter 11 cases and maximize value. Riecker said the company has “moved those discussions [excluding the store closures already announced] within the confines of the Chapter 11 cases to provide all of the company’s stakeholders, as well as the court, with the opportunity to evaluate the wisdom of those transactions.”

The liquidations of the initial round of 142 store closures would net the company $42 million, Rieger said.

According to Riecker’s declaration, the company has “certain tax attributes,” including a tax basis in certain assets exceeding the value of those assets, in excess of $5 billion in net operating loss carryforwards, and tax credits of roughly $900 million, although it is unclear at this point exactly how these tax attributes would figure into any going concern sale.

The company said it formed a special committee to oversee the restructuring process that would “have decision making authority with respect to transactions involving affiliated parties.” The special committee is composed solely of independent directors, specifically, Alan Carr, Paul DePodesta, Ann N. Reese, and William Transier.

The company named Carr, a well-known advisor and attorney in the restructuring industry, to the board last week, setting off the intense media speculation about the company’s coming Chapter 11 filing. Similarly, the company noted that Transier “has extensive restructuring experience involving companies with complex capital structures and has served on special committees of independent directors responsible for overseeing restructuring processes.”

In terms of milestones, the company’s DIP provides that the company must file a reorganization plan and disclosure statement by Feb. 18, 2019, that the company obtain approval of its disclosure statement by March 25, 2019, that the company obtain confirmation of the reorganization plan by April 29, 2019, and that the plan become effective by May 14, 2019.

While these milestone deadlines should be treated with a large grain of salt at this point in the proceedings, given the reported desire of some lenders to see the company liquidated and the failure of the company’s prior restructuring initiatives to gain traction, it is worth noting that Riecker warns that “time is of the essence in these Chapter 11 cases.”

The company currently “burns a significant amount of cash—approximately $125 million per month—in the course of operating [its] business,” Riecker said, explaining that this burn rate “is due, at least in part, to the discrepancy between the company’s operational capacity, which can support a business of the company’s previous size, and the company’s current, reduced footprint that has resulted from its ongoing store closure initiative.”

Rieger said the company hopes “that this imbalance will be corrected through the purchase of the company’s viable stores, but in the meantime, these Chapter 11 cases must progress with all due speed to stem these substantial operating losses that will continue to decrease the value of the debtors’ estates.” — Alan Zimmerman

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Struggling Sears Names Distressed Advisory Expert Carr as Independent Director

Sears Holdings Corp.‘s board yesterday named Alan Carr as an independent director. Carr is managing member and CEO of Drivetrain, a distressed and restructuring advisory firm.

Carr is set to hold the position until the issuer’s 2019 annual shareholder meeting or until a successor is elected and qualified, according to a company filing.

Soon-to-mature bonds of Sears were thinly traded on news of Carr’s appointment, with the issuer’s roughly $134 million of 6.75% second-lien notes due Oct. 15 changing hands on either side of 87.5, roughly in-line with levels week-over-week.

In addition to the above-mentioned notes, Sears has $668 million of other debt maturing in the next twelve months, according to regulatory filings.

The move comes two weeks after Sears CEO Eddie Lampert’s hedge fund ESL Investments outlined a multi-pronged proposal for the distressed retailer to avoid bankruptcy, according to an amended filing with the SEC. Lambert’s Sept. 23 plan calls for the restructuring of around $1.1 billion of the company’s debt via a distressed exchange that would reduce its $5.6 billion debt burden to approximately $1.24 billion, assuming all sale proceeds are used to pay down debt, according to the filing.

Lambert’s proposal also urges the company to sell $1.5 billion of real estate as well as divest some $1.75 billion of assets, including Sears Home Services and the Kenmore appliance brand, the proceeds of which would be used to pay down debt.

As reported, Lampert earlier this year urged the ailing retailer to sell its prize assets, writing in a letter that ESL is willing to acquire the Sears Home Services division and PartsDirect business. ESL has also offered $400 million to acquire the Kenmore brand.

In terms of the previously mentioned distressed exchange, ESL has proposed that eligible holders of the ESL second-lien PIK loan due 2020 and 2019 would be offered the option to exchange their holdings for mandatorily convertible secured debt or else extend maturities with a reduced conversion price. Unsecured holders are offered the choice to swap into mandatorily convertible unsecured debt or a cash option. The aforementioned 6.75% second-lien notes due October 2018 are excluded from the proposal.

Hoffman Estates, Ill.–based Sears Holdings operates in two segments, Kmart and Sears Domestic. Sears Roebuck Acceptance Corp. operates as a subsidiary of Sears, Roebuck and Co., which itself is a subsidiary of Sears Holdings. Ratings are CCC–/Ca on Sears Holdings and CCC–/C on Sears Roebuck Acceptance Corp. — James Passeri/Rachelle Kakouris

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Retail Sector Sees August Rebound in Leveraged Loan Trading Market

Biggest Gainers/Losers – US Leveraged Loan Secondary Trading Market

aug big movers loans

Despite continued struggles by high-profile leveraged loan issuer J.C. Penney (link) during the second quarter, the long-beleaguered retail industry had a strong August, making up five of the 10 largest advancers in the loan trading market during the month, according to S&P/LSTA Loan Index.

One reason: buyer confidence continues to improve. Based on The Conference Board’s Consumer Index, sentiment reached its highest level since October 2000, with a reading of 133.4, up from 127.9 in July.

This positive backdrop, coupled with stronger overall earnings, saw several names in the industry that have struggled previously climb higher, including Neiman Marcus GroupBelkPetSmartJ. Crew, and Ascena Retail Group. Elsewhere, American Tire Distributors, a name that has been among the largest decliners after the loss of its contract with both Goodyear Tire & Rubber and Bridgestone earlier in the year, recouped some losses this month, making it among the top 10 gainers, after the company reported a 5.8% year-over-year increase in net sales for the second quarter.

About J.C. Penney. It was one of the month’s largest decliners, reporting lower-than-expected earnings, with adjusted EBITDA coming in at $105 million, 45.5% below Street forecasts, based on consensus data compiled by S&P Global Market Intelligence. The issuer’s term loan B due 2023 (L+425, 1% LIBOR floor) was quoted at 90/91.375 after the disappointing results, from a 95/95.875 level previously.- Tyler Udland

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JC Penney High Yield Debt Plunges into Distressed Territory

J.C. Penney 8.625% second-lien secured bonds due March 2025—which priced at par just five months ago—slid some 10 points in trading Thursday, marking their inaugural descent into distressed territory at 73.5, trade data show.

The move follows the release of a substantially narrower-than-expected bottom line for the struggling department-store operator, as second quarter adjusted EBITDA of $105 million clocked in 45.5% below Street forecasts, based on consensus data compiled by S&P Global Market Intelligence.

Meanwhile, J.C. Penney’s 5.875% secured notes due July 2023 were off as much as 4.75 points in Thursday trading, declining to all-time lows of 89.75, before settling in midafternoon trading to 90.75 The secured tranche was placed in June 2016 at par, as part of a $500 million print backing the pay-down of real-estate term debt.

The issuer’s B term loan due 2023 (L+ 425, 1% LIBOR floor) was quoted in a 92.375/94.125 context in morning trading, down from 95/95.875 yesterday, according to market sources.

Management also slashed the company’s full-year EPS guidance to a loss per share of $0.80 to $1, from a prior forecast of a $0.07 loss to a $0.13 gain previously—sending shares to new sub-$2 lows. Sources highlighted that the company seems to be pursuing “buying and chasing” as it looks to take substantial markdowns to balance its inventory.

J.C. Penney’s secured bonds had previously declined in May, following mixed first-quarter results and the resignation of its then-CEO Marvin Ellison, who announced plans to pursue opportunities with Lowe’s Companies.

J.C. Penney is a Plano, Tex.–based operator of more than 1,000 department stores across the U.S. — James Passeri/Tyler Udland

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Neiman Marcus Debt Rallies as Financial Results Top Expectations

Debt backing Neiman Marcus Group shot up today after the company posted financial results that bested analyst expectations due to better sales at its stores that it partly attributed to increased tourism and the oil patch recovery.

The issuer’s term loan due October 2020 (L+325, 1% LIBOR floor) was bracketing 90 this morning, up roughly two-to-three points since yesterday, sources said.

With the company remaining vague on its intentions to pay its interest in kind past the April 15 coupon date, the Neiman Marcus $628 million issue of 8.75%/9.50% senior PIK toggle notes due 2021 rallied more than eight points to a 14-month high of 68.75.

In an effort to preserve liquidity, the company previously elected to pay interest for the period to Oct. 14 in the form of more debt.

The company’s $960 million issue of 8% cash-pay notes due 2021 gained as much as 5 points, to 69.

The retailer today reported $1.48 billion in sales for its fiscal second quarter ended Jan. 27. The performance was up 6.2% from the year-ago equivalent period and above the $1.47 billion estimate cited in a note from Citi analyst Jenna Giannelli. Adjusted EBITDA for the quarter came in at $155 million, ahead of Citi’s $144 million projection and up roughly 22% from the same period last year.

Company executives in a conference call this morning cited improvements in the oil patch, which contributed to better operating results at its Texas stores, and increased tourism to its locations during the holiday season as some of the reasons behind the solid numbers.

On the call today, CEO Geoffroy van Raemdonck said the company has now recorded two straight quarters of sales increases for the first time since fiscal 2015, and that its online business now accounts for more than 34% of total revenue.

Also on the call, Chief Accounting Officer T. Dale Stapleton addressed the company’s liquidity position.

“I think we’re extremely comfortable with our liquidity providing us with sufficient funds to fund our operations as well [as] strategic initiatives,” Stapleton said, according to a transcript from S&P Global Market Intelligence. “So I think that’s one critical point. I think the second critical point is that with the maturity ladder of our debt, we don’t see the first maturities until October of 2020. And so given where we sit today, we believe that we have sufficient kind of runway to kind of think about our debt, our capital structure in a very thoughtful, deliberative and prudent way. Throughout kind of the downturn, I think we have been very active in managing our liquidity, and we will be active and proactive in managing through kind of our capital structure.”

Current CEO van Raemdonck joined the company earlier this year after Karen Katz stepped down from her post.

Corporate ratings are CCC/Caa2. — Kelsey Butler/Rachelle Kakouris

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American Greetings Nets Financing for Purchase by CD&R

American Greetings on Tuesday announced it has obtained committed financing from Barclays, Deutsche Bank, Citizens Bank, ING Capital, Bank of America Merrill Lynch, HSBC, Sumitomo Mitsui Financial Group, and KeyBanc Capital Markets to support Clayton, Dubilier & Rice’s purchase of a 60% ownership stake in the company. Further details of the financing were not yet disclosed.

The Weiss Family, which founded the company in 1906, will retain a 40% stake in the company, according to a company release. As reported, the issuer was taken private by the Weiss family in 2013, in a transaction backed by $600 million in debt financing, including a $400 million term loan and a $200 million revolving credit.

John Beeder, the current president and chief operating officer, will become chief executive officer at the close of the transaction, according to the company. Current co-CEOs Zev Weiss and Jeffrey Weiss, and current chairman Morry Weiss will sit on the board. David Scheible, an operating advisor to CD&R funds and former chairman and chief executive officer of Graphic Packaging, will become chairman of American Greetings. John Compton, a CD&R operating partner and former president of Pepsico, “will be actively involved with the business and serve on the company’s board,” the company said.

As reported, the issuer last tapped debt markets in February 2017, with a $400 million offering of 7.875% notes due 2025, with proceeds backing a tender offer for any and all of its $285 million of 9.75%/10.50% PIK-toggle notes due 2019 issued by Century Intermediate Holding Company, and the $225 million of 7.375% notes due 2021 issued by American Greetings.

The issuer’s 7.875% notes due 2025 were changing hands at roughly 102.75 on Tuesday, down 3.25 points from Thursday levels, according to MarketAxess.

S&P Global Ratings last month lowered the issuer’s outlook to negative, from stable, while keeping corporate and bond ratings unchanged at BB–, citing higher-than-expected leverage and concerns that leverage “may not materially improve, depending on the degree to which the company prioritizes debt repayment over dividends to its controlling owners, the Weiss family.” Moody’s meanwhile maintains corporate and bond ratings of B1 and B3, with a stable outlook. The issuer’s B term loan is rated BB+/Ba2.

American Greetings is a Cleveland-based designer, manufacturer and distributor of greeting cards, as well as gift packaging, party goods, and stationery products. — James Passeri

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