99 Cents Only Stores Update – Restructuring News

This week, Durig Capital provides a brief update on 99 Cents Only Stores LLC, a deep discount retailer whose bonds we have reviewed in the past for our Fixed Income 2 (FX2) High Yield Managed Income Portfolio. 99 Cents Only Stores has recently been challenged by its outstanding debt obligations. Here are some of the highlights:

  • Deep discount retailer 99 Cents Only Stores recently completed an arrangement with creditors which would eliminate many of their short term debt obligations.

  • Debt to equity swaps are a common method  companies use to improve liquidity.

  • Under the newly agreed upon terms, 99 Cents Only Stores will issue common and preferred stock for some of its outstanding debt.

 Recent Financial Statements

Bring Home 9.0% YTM with Conn’s Inc., Bonds Maturing July 2022

This week’s bond review delves into the retail sector with a specialty retailer of durable consumer goods who also offers its customers financing on their purchases. Conn’s Inc., which is headquartered in Texas, has a market presence that stretches across the southern United States. Conn’s set some records in its most recent quarterly results (third quarter for its fiscal year 2019).

  • Record third quarter retail gross margin of 41.2%
  • Record quarterly credit segment revenues of $89.9 million.
  • For the first nine months of fiscal year 2019, the company registered its second highest nine month operating income ever
  • Excellent interest coverage of 2.4x.