Party City has reopened talks with creditors to address its liquidity needs, according to a Bloomberg report that cited anonymous sources.
Assisting the retailer in the talks are its financial and legal advisers, Moelis & Company and law firm Paul Weiss Rifkind Wharton & Garrison, according to Bloomberg.
The news service also noted that market prices for some of Party City’s bonds fell following its initial report of creditor talks.
Party City did not immediately respond to Retail Dive’s request for comment.
As of its third-quarter earnings report, Party City had $121.5 million in liquidity, including $27.8 million in cash and the rest made up of availability under its asset-based lending facility. That is down from liquidity of $355.6 million in Q3 of last year.
As of Sept. 30, the company had total debt of roughly $1.7 billion.
While Party City’s sales held during the important Halloween season for the retailer, its core customers are under pressure from inflation. Expecting a bumpy road ahead, the company plans to reduce its corporate workforce by 19% through job cuts and leaving open positions unfilled.
Fitch and Moody’s have both downgraded Party City in recent months. In cutting the company’s credit rating, Fitch analysts pointed to a debt maturity next year as well as “rapid deterioration” in Party City’s operations and liquidity, and they called its capital structure “likely untenable.”
