IFR Magazine – June 08, 2019

(Nancy Kaufman) #1

PetSmart lenders tune into Chewy IPO


„ Equities Online pet goods unit promises to fetch healthy return

BY STEPHEN LACEY

CHEWYûTHEûONLINEûAFlLIATEûOFû0%
BACKEDûPETûSTOREûOPERATORû
PETSMART ûOPENEDûTHEûDOORSûLASTû
WEEKûONûAû53Mû)0/ûTHATûISû
central not only to unlocking
VALUEûFORû0ET3MARTSûOWNERSûBUTû
also to protecting the claims of
ITSûCREDITORS
0ET3MARTûACQUIREDû#HEWYûFORû
53BNûTWOûYEARSûAGO ûGROWINGû
THEûDEBTûPILEûUSEDûTOûFUNDûAû
53BNû,"/ûINû.
Morgan Stanley ûJP MorganûANDû
Allen & CoûONû-ONDAYûLAUNCHEDû
#HEWYSû)0/ûWITHûMûSHARESû
ATû53nûAPIECEû4HEYû
EXPECTûTOûPRICEûTHEûDEALûAFTERûTHEû
MARKETûCLOSEûONû*UNEû
4HEûOFFERINGûWOULDûVALUEû
#HEWYûATûAûFROTHYû53BN
0ET3MARTûISûSELLINGûMû
SHARESûONûTHEûBASEûDEALûANDû
#HEWYûTHEûREMAININGûMû
0ET3MARTûISûALSOûCONTRIBUTINGû
MûSHARESûVIAûTHEûGREENSHOE û
INCREASINGûTHEûPARENTSûPOTENTIALû
TAKEûTOûROUGHLYû53M
)Nû!PRIL û-OODYSûMOVEDûITSû
OUTLOOKûONû0ET3MARTûTOûSTABLEû
FROMûNEGATIVEûANDûAFlRMEDûITSû

#AAûRATINGû4HEûRATINGSûAGENCYû
CITEDûWEAKûCREDITûMETRICSûWITHû
LEASEûADJUSTEDûDEBT%BITDAûOFû
TIMESûATû&EBRUARYû
h)Fû#HEWYSû)0/ûGOESûWELLûITû
WOULDûCERTAINLYûBEûAûPOSITIVEûFORû
CREDITORS vûSAIDû*ENNYû
7ARSHAFSKY ûAûCOVENANTûANALYSTû
ATû8TRACTû2ESEARCHûh!NDûIFû
#HEWYSûSTOCKûPERFORMSûWELLûINû
THEûAFTERMARKETûITûWOULDû
IMPROVEû0ET3MARTSûLOAN
TO
COLLATERALûVALUEv

TUG-OF-WAR
#HEWYûHASûLATTERLYûBEENûSUBJECTû
TOûAûTUG
OF
WARûBETWEENûSOMEûOFû
THEûLARGESTûlNANCIALûINSTITUTIONSû
ONûTHEûPLANET ûWITHûLITIGATIONû
ONLYûSETTLEDûINû!PRILû0ET3MARTûISû
OBLIGATEDûUNDERûTHEûTERMSûOFû
THATûSETTLEMENTûTOûUSEûPROCEEDSû
RAISEDûFROMûTHEû)0/ûTOûREPAYû
PORTIONSûOFûOUTSTANDINGûBONDSû
ANDûLOANS
4HEûDISPUTEûWASûTRIGGEREDû
WHENû0ET3MARTûBACKERS ûLEDûBYû
"#û0ARTNERS ûLASTûYEARûAWARDEDû
THEMSELVESûûOFû#HEWYûASûAû
DIVIDENDûANDûPLACEDûANOTHERû
ûINûANûUNRESTRICTEDû
SUBSIDIARYû&IRST
LIENûCREDITORS û

INCLUDINGû!POLLOû'LOBALû
THEREFOREûSAWûTHEûPROPORTIONûOFû
#HEWYSûEQUITYûPLEDGEDûINû
SUPPORTûOFûTHEIRûDEBTûDROPûTOû


DOG’S DINNER?
#HEWYSûHIGHûTOP
LINEûGROWTHû
ISûTHEûREASONûFORûOPTIMISM
)NûTHEûlRSTûQUARTER ûTHEû
COMPANYûSAWûTOP
LINEûSALESû
JUMPûûYEARûONûYEARûTOû
53BNû!DJUSTEDû%BITDAû
LOSSESûFORûTHEûPERIODûSHRANKûTOû
53M ûFROMû53MûAû
YEARûAGO
.EARLYûTWO
THIRDSûOFûITSûSALESû
AREûGENERATEDûTHROUGHû
AUTOMATICûSUBSCRIPTIONS û
PROVIDINGûPREDICTABILITYûANDû
HOPESûOFûPROlTABLYûSCALINGûTHEû
BUSINESS
/VERûTHEûTRAILINGûûMONTHSû
ENDEDû-ARCHû û#HEWYûHASû
SOLDû53BNûOFûGOODSûACROSSû
ITSûPLATFORM ûUPûFROMû
53BNûINûlSCALûûANDû
53BNûINû
4HEû)0/ûVALUESû#HEWYûATû
JUSTûUNDERûTWOûTIMESûSALES
%#-ûHISTORIANSûWILLûPOINTûTOû
0ETSCOM ûTHEûONLINEûPETûSHOPû

THATûWENTûTOûDOGGYûHEAVENûJUSTû
nine months after going
PUBLICûINû ûASûEVIDENCEû
THATûSHIPPINGûDOGûFOODûISû
UNECONOMICAL
"UTûTHISûISûAûDIFFERENTûERA
&RESHPET ûTHEûFRESHûPETûFOODû
MAKERûTHATûWENTûPUBLICûINû
 ûNOWûTRADESûATûûTIMESû
44-ûSALESûANDûPETûINSURERû
4RUPANIONûATûTHREEûTIMES û
though neither is a perfect
COMP
7AYFAIR ûWHICHûWENTûPUBLICû
INûûONûTHEûPREMISEûOFû
SELLINGûFURNITUREûONLINE ûISû
PERHAPSûTHEûBESTûEXAMPLEûOFû
POTENTIALûUPSIDEû!Tû53û
VERSUSûTHEû53û)0/ûPRINT û
7AYFAIRûNOWûTRADESûATû
TIMESûTRAILINGûSALES
#HEWYûDOESûSTILLûNEEDûTOûSNIFFû
OUTûPROlTABILITY ûBUTûITûDOESûHAVEû
SOMEûLEADSû#HEWYSûHIGHER
MARGIN ûPRIVATEûLABELûBRANDSûNOWû
ACCOUNTûFORûMID
SINGLEûDIGITû
PERCENTAGEûOFûNETûSALESû!NDûLASTû
YEAR û#HEWYûLAUNCHEDûAûPETû
pharmaceuticals unit to
COMPLEMENTûVETERINARYûDIETû
OFFERINGS ûPROVIDINGûITûWITHû
INROADSûINTOûTHEûVETûCOMMUNITYû„

Top news


For more information on the various advertising and sponsorship opportunities available within IFR,
email: [email protected]

Reach the people who matter


Advertising and sponsorship


opportunities in IFR


The most senior professionals in the world’s capital markets rely on IFR for authoritative and
independent news, data and analysis – and have done for more than 40 years.

IFR provides an unrivalled opportunity for advertisers to reach the people who drive and shape the industry
and gives them the chance to associate their company with the world’s number one source of global capital
markets intelligence.
Free download pdf