SFLY 8.5 10/01/26

Photo Holdings Merger Sub Inc Senior Secured Notes

Credit, TMT, Event Driven/Special Sit


Publicly traded companies mentioned herein: Apollo Global Management Inc (APO)

Highlights

The presenter is short Shutterfly’s senior secured, 8.5% coupon notes that mature in October 2026 and are currently trading at 101, believing the position offers an attractive setup with little risk since the bonds are 7 points off their all-time highs. In Q4’19, APO took Shutterfly private at a valuation of ~$2.7B and loaded it up with debt. Approximately 2/3 of the business is Shutterfly Consumer, which offers personalized photo products (e.g., picture books, custom coffee mugs, etc.). The remaining approximately 1/3 is the Lifetouch segment, which is the largest provider of school photo services. His bearish outlook is due to its high leverage, negative EBITDA trend since 2019, consistent burning of cash, and bulls banking on a very strong Q4 that he finds unlikely. If he is correct, Q4 underperformance should act as a catalyst causing a downgrade of the bond.

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Idea Discussion

Commentor 1 - 2 weeks ago

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