Apollo Signs On to PetSmart Proposed Loan Amendment

(Bloomberg) -- One of PetSmart Inc.’s largest loan holders, Apollo Global Management, signed on to a newly proposed loan amendment, according to people with knowledge of the matter.

With Apollo on board PetSmart has just over half of the 51 percent approval it needs get the amendment through, said the people, who asked not to be identified discussing a private matter. The investor holds a little more than 20 percent of the roughly $4.2 billion loan, they said. The deadline is set for tomorrow, or sooner if the company gets the necessary approval before then, said the people.

Representatives for PetSmart and Apollo declined to comment.

Other lenders who opposed the first proposal continue to reject the amendments that they say still do not return enough of Chewy’s value back to creditors, the people said. A group led by law firm Arnold & Porter scheduled a call at 6 p.m. New York time on Tuesday to discuss the changes, said the people.

Last week PetSmart spoke with lenders to gather feedback on the retailer’s original proposal. Based on that process, it launched the second offer to address the holders main points of concerns, the people said. The second proposal provides further protection and limits the company’s ability to monetize the 20 percent equity stake of its Chewy.com unit that it had moved out of creditors’ reach.

Phoenix-based PetSmart is entangled in a dispute between its lenders and private-equity owners -- a group led by BC Partners -- after it moved the stake in Chewy.com to a parent company and another 16.5 percent to an unrestricted subsidiary. Lenders are claiming that PetSmart was insolvent at the time of the transfer and say they consider it a fraudulent maneuver. The company last year pegged the value of the Chewy unit at $4.45 billion, excluding cash on the balance sheet.

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, Dan Wilchins, Nikolaj Gammeltoft

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