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party city close to 2.5 Bil deal iparty has heavy buying today IPT
Posted by: jake71440 (IP Logged)
Date: May 30, 2012 07:56PM

Party City nears sale valued at $2.5B

by Lisa Ward | Published May 29, 2012 at 4:26 PM
Party City Holdings Inc. is nearing a sale in a deal valued at about $2.5 billion, according to people familiar with the matter.

Leonard Green & Partners LP, working with TPG Capital, is among the final bidders for the Elmsford, N.Y.-based manufacturer, distributor and retailer of party supplies, sources said. BC Partners Ltd. and Thomas H. Lee Partners LP are also among the finalists. Bids were due on Friday, May 25, and a deal is likely to be announced within the coming weeks.

Party City, which filed for an initial public offering in April, is owned by Advent International Corp., Berkshire Partners LLC and Weston Presidio. The company reported adjusted Ebitda of $268 million and revenues of $1.8 billion for the 2011 fiscal year of 2011, ending Dec. 31. It has total debt of $982 million, according to the IPO prospectus. The company operates 1,200 retail stores in U.S. and Canada and distributes party supplies internationally.

Goldman, Sachs & Co. and Deutsche Bank AG are running the auction. Deutsche Bank is providing a staple financing, sources said, confirming a report from Reuters, which first reported in April that the company was simultaneously considering a sale and an IPO. Reuters said the staple was 6 times Ebitda.

Advent holds a 37% stake in the company, Berkshire owns 36%, and Weston Presidio holds 17%.

Berkshire and Weston Presidio bought the company in April 2004 from Goldman, investing $298.3 million for their 87% stake. In August 2008 the sponsors sold Class B common stock to Advent. At the time, Advent managing director Steven Collins told The Deal his firm had invested more than $250 million in the company.

In December 2010, the company refinanced its term loan, paying its sponsor a $311 million dividend. The 2010 dividend was the only one paid on the company's common stock during the past five years, according to the IPO documents, which also show that the sponsors collected $1.3 million in annual management fees.

Under the buyout firms' ownership, Party City revenues grew from $1.2 billion in 2007 to $1.8 billion in 2011. Its adjusted Ebitda grew from $152 million to $268 million over the same time period.

The sellers may be under some pressure to get the deal closed and syndicated this summer. The company's retail and online business realizes a significant portion of Party City's revenues in September and October, the weeks leading up to Halloween.

"An economic downturn during this period could adversely affect us to a greater extent than if such downturn occurred at other times of the year," the prospectus notes. "Any unanticipated decrease in demand for our products during the Halloween season could require us to maintain excess inventory or sell excess inventory at a substantial markdown, which could have a material adverse effect on our business, profitability, ability to repay any indebtedness and our brand image."

Leonard Green, TPG Capital, BC Partners and Deutsche Bank declined to comment. Goldman, TH Lee, Party City, Berkshire, Advent and Weston Presidio didn't return calls.

Iparty corp reported a strong Q1 and today had sec 4 filings from the CEO VP and for the first time the CFO buys as well ,Mr Peter Lynch picked up 6% of the the company this year and party city is in play for a bid for 2 bil buyout. iparty corp is the last publicly traded party chain company in the USA that has not been acquired yet -- Net loss of $1.2 million for the first quarter of 2012, compared to a net loss of $1.5 million for the first quarter of 2011.

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