Saturday, June 3, 2017

Bain's Gymboree Misses Interest Payment

News stories highlighted Gymboree's failure to make a required interest payment.  All shared the expectation of bankruptcy.  MarketWatch reported:

Gymboree is another retailer that is saddled with debt taken on in a leveraged buyout. The company was acquired by Mitt Romney’s former firm Bain Capital in 2010 for $1.8 billion. Today, the company has $1.043 billion of debt, split between a $769 million term loan, the $171 million of 9125% senior secured notes due December of 2018, an $80 million ABL revolving credit facility and a $49 million first-lien ABL term loan.

The company’s bonds were last trading at 8.729 cents on the dollar, according to MarketAxess, deep into distressed territory. Its term loan was quoted at 44 cents to 46 cents on the dollar, according to Debtwire.
The report did not say how much Bain siphoned from Gymboree via deal fees, annual management fees and special dividends/distributions.  It did not share whether Bain added Gymboree debt since 2010 to fund a sponsor PEU dividend.

Also, there is no word on credit default swaps Bain may have purchased for risk management purposes.  We'll see if any of this information exists or comes to light.

As of now everything is marked down, including Gymboree's debt.