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06 Jan 2006
MOODY'S CONCLUDES REVIEW OF AMSCAN'S RATINGS ON CLOSING OF PARTY CITY ACQUISITION; DOWNGRADES CORPORATE FAMILY TO B2 AND SR SUB TO Caa1
Approximately $650 Million of Rated Debt Facilities Affected.
New York, January 06, 2006 -- Moody's Investors Service has taken the following actions regarding Amscan
Holdings, Inc. ("Amscan") with the closing of
its acquisition of Party City Corporation ("Party City") on
December 23, 2005: 1) downgraded Amscan's corporate
family rating to B2 and its senior subordinated notes rating to Caa1;
2) withdrew B1 ratings on Amscan's prior senior secured credit facilities;
3) affirmed B1 and B3 ratings on Amscan's new senior secured first
lien and second lien credit facilities, respectively. The
rating actions conclude the review of Amscan's ratings initiated
upon its announcement of the Party City acquisition in September 2005,
and reflect the substantially similar terms of the acquisition (and related
financing) as indicated in Moody's press release dated December
19, 2005. At that time, Moody's had guided that
the above-listed rating actions would be taken upon the close of
The downgrade of Amscan's corporate family and senior subordinated
notes ratings reflects the weakened financial profile resulting from the
high-priced and majority debt-financed acquisition,
which heightens risks associated with the timely realization of synergies,
the retention of non-Party City customers, and the stabilization
of Party City sales and profits. These risks are moderated,
in part by the sensible combination of the leading vendor and specialty
retailer in the relatively stable party supply market and by the company's
well-considered synergy, customer retention, and operational
strategies. The rating outlook is stable.
For a more detailed discussion of key rating drivers please refer to Moody's
press release on Amscan dated December 19, 2005.
The following ratings were affected:
$60 million second lien senior secured eight-year term loan
facility, affirmed at B3;
$85 million senior secured six-year revolving credit facility,
affirmed at B1;
$325 million (formerly $420 million) senior secured seven-year
term loan facility, affirmed at B1;
Corporate family rating (formerly senior implied rating), downgraded
to B2 from B1;
$50 million senior secured revolving credit facility due 2010,
$205 million senior secured term loan B facility due 2012,
$175 million 8.75% senior subordinated notes due
2014, downgraded to Caa1 from B3.
Amscan Holdings, Inc., with executive offices in Elmsford,
New York, is a leading manufacturer of party goods and the largest
manufacturer of metallic balloons. The company sells its products
through party superstores, party goods retailers and other retail
distribution channels. Party City Corporation, with headquarters
in Rockaway, New Jersey, currently operates more than 500
company-owned and franchised party goods stores in the United States
and Puerto Rico. For the twelve-month period ended September
2005, the combined companies had pro forma revenues of around $875
million and pro forma EBITDA of approximately $100 million,
excluding the synergies expected to be generated by the acquisition.
William L. Hess
Senior Vice President
Corporate Finance Group
Moody's Investors Service
Kevin L. Ziets, CFA
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
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