99 Cents Only Stores Hires Advisers to Help Restructure Debt

Updated on
  • Company taps Guggenheim Partners to help with debt amendment
  • Struggling retail chain was taken private in 2011 deal

99 Cents Only Stores has hired Guggenheim Partners to help cope with its $1 billion in debt, according to two people with knowledge of the matter, becoming the latest retail chain seeking assistance with a borrowing wall.

The deep-discount retailer, which was taken private by Ares Management and Canada Pension Plan Investment Board in 2011, also brought in law firms Proskauer Rose LLP and Milbank Tweed Hadley & McCloy LLP, said the people, who asked not to be identified because the deliberations are private.

99 Cents Only Stores joins a parade of retailers facing a menacing debt burden this year. Earlier this week, Toys “R” Us Inc. filed for bankruptcy. That chain was torpedoed by more than $5 billion in debt, which required over $400 million a year to service.

Representatives at 99 Cents Only Stores, Guggenheim, Proskauer and Milbank didn’t immediately respond to requests seeking comment.

Though some dollar-store chains have thrived in North America’s thrifty consumer economy, 99 Cents Only Stores has struggled to compete. Online sellers also are posing a bigger threat to the chain, with their limitless selection of goods available at the click of a mouse.

99 Cents said Tuesday that it has started talks to extend the maturity of its debt by three years to 2022. In return, the sponsors will agree to make their holdings subordinate to the rest of the loan. Its bonds due 2019 have been trading at distressed levels for more than two years.

They last traded at 84.25 cents in August, according to data from Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

In a filing earlier this month, the company said it was “actively pursuing” opportunities to improve its capital structure. 99 Cents Only Stores may refinance, exchange or amend outstanding debt and “engage with existing and prospective holders,” the retailer said.

— With assistance by Lauren Coleman-Lochner

(Updates with details on amendments in sixth paragraph.)
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