“Party City has not given its stock and bondholders a reason to party over the past year. The company ended 2019 with its stock down 76.5% as it saw EBITDA drop 39% from the previous year due to soft Halloween sales and helium supply problems.
The first half of 2020 has been no better. As social distancing has become the normal, party and gatherings have disappeared. Not such a great thing if you are in the business of selling balloons and party supplies.
In March, the stock hit a low of $0.27 cents ($25M market cap) which was down 88% for the year. The stock is currently down 45% YTD after the recent rally. With a current market cap of roughly $120M, the company continues to face liquidity issues and struggles with its debt.
Many investors expected Party City would become another casualty of the Covid-19 epidemic and ultimately be forced into bankruptcy. Before the announced exchange, both senior bonds (PRTY 6.125% due 2023 and PRTY 6.625% due 2026) were trading between 4-6 cents on the dollar as bondholders feared little to no recovery value.” – Rich Meatto, Koyfin
Read more on Koyfin Research.