More details of Shutterfly’s debt refinancing emerge

Refinancing Shutterfly LLC’s billion-dollar debt refinance package came with some caveats, according to Bloomberg Law. Shutterfly paid a hefty price to refinance some of its risky debt, selling a $1.15 billion junk bond at a yield of 12.5% and offering several buyer-friendly terms like restricting Shutterfly’s ability to pay dividends, make investments, move money beyond creditors’ reach, and inflate earnings through add-backs tied to future savings or one-time costs, according to reports. A group of banks led by Barclays Plc also switched plans to sell a $500 million leveraged loan. The first-lien loan is expected to be held by a private credit lender, while a riskier second-lien portion was increased to $250 million, according to bond documents seen by Bloomberg.

According to TradingView, “Shutterfly posted an EBITDA loss of $19.7 million for the three months through March, wider than the $17.2 million loss a year earlier, while net revenue fell 8% to $313.5 million. Total debt stood at $2.4 billion at the end of March, but the company had $474 million of liquidity and an undrawn revolver. Moody’s has said cash flow and operating metrics have improved since the debt exchange two years ago, with possible further improvement over the next 12 to 18 months.”

According to Private Equity Wire, despite the initial misgivings, the refinancing was oversubscribed, “underscoring continued appetite for high-yield instruments when yields are sufficiently attractive.”