Shutterfly is looking to sell $1.9 billion in junk debt to whittle down pile
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Personalized photo products leader Shutterfly is looking to refinance a looming debt pile with new sales of $1.875 billion of junk bonds and loans, according to Bloomberg. The Apollo Global Management Inc.-backed photo-sharing site is selling a $500 million term loan, $1.15 billion in junk bonds, and a $225 million riskier second-lien loan, according to people with knowledge of the matter. The deal comes after talks with private credit lenders lost momentum.
Barclays Plc is running both the term loan and bond sale, said the reports.
The loans and bonds are expected to wrap up on June 10. The deal comes after talks with private credit lenders lost momentum.
SPGlobal rates the proposal as “credit neutral, with respect to our base-case credit-metric assumptions, and our long-term issuer credit rating remains ‘B-’.”
The orgnization said it assigned a ‘B’ issue-level rating and ‘2’ recovery rating to Shutterfly’s (B-/Stable/–) proposed $500 million first-lien term loan due in 2031. It has also proposed to issue $1,150 million in senior secured notes that will rank pari passu with the new term loan and is also due 2031. The ‘2’ recovery rating reflects our expectation of substantial (70%-90%; rounded estimate: 75%) recovery prospects in a default scenario. As part of the transaction, the company also plans to raise $225 million in second-lien term loan debt (unrated).
SPGlobal expects that Shutterfly will continue to improve operations, resulting in interest coverage of about 1.5x and adjusted leverage in the low-7x area over the next 12 months.
