Perelman’s Deluxe Entertainment Lenders Commit to Capital Infusion

(Bloomberg) -- Ronald Perelman's Deluxe Entertainment Services Group Inc. has lined up a commitment from a majority of its lenders to infuse $73 million of new capital, according to people with knowledge of the matter. Price quotes slid on the company's debt.

Existing first-lien creditors have agreed to provide the cash as part of a larger effort to refinance and de-leverage the media services company, the people said. All lenders will be offered the chance to participate, said the people, asking not to be identified discussing a private transaction.

Deluxe, which is backed by Perelman's MacAndrews & Forbes Inc., expects to finalize terms in the coming weeks, the people said.

“Once we complete the refinancing process to reduce our debt, we expect to have an optimized capital structure that will further position Deluxe to take advantage of the strengths of our business, continue our transformation strategy and drive future growth,” Chief Executive Officer John Wallace said in an emailed statement to Bloomberg.

Quotes on the first-lien loan due in 2020, with about $768 million outstanding, fell to about 70 cents on the dollar Wednesday, from around 89 before a conference call today with lenders, according to people familiar with the pricing. The loan fell further, quoted between 35 and 45 cents on the dollar, following news of Deluxe's effort to refinance its debt load, which totals about $1 billion, the people said.

Spinoff Discarded

Deluxe had considered spinning off its creative services business, with the proceeds used to amend and extend the existing loan, before ultimately opting for the capital infusion, the people said.

The company is working with restructuring advisers at law firm Kirkland & Ellis LLP and investment bank PJT Partners Inc., the people said. A group of lenders is working with lawyers from Stroock & Stroock & Lavan LLP and turnaround advisers at FTI Consulting Inc., the people said.

The added capital will support investments in new services, innovation and technology, the people said. Deluxe is a video creation and distribution company whose services include delivering content, creating visual effects, and offering post-production and 2D-3D conversion, according to its website.

Deluxe is headquartered in New York and Los Angeles, with operations in 38 markets worldwide and a staff of more than 7,500.

“Our industry is in the midst of a dramatic transformation driven by the growing importance of entertainment for consumers and the demands for more content and streaming platforms and technology,” Wallace said.

A representative from MacAndrews & Forbes declined to comment. Kirkland, PJT, and Stroock didn't respond to messages seeking comment; FTI didn't have an immediate comment.

To contact the reporter on this story: Katherine Doherty in New York at kdoherty23@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Nicole Bullock

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