Wellness Pet Closes Non-Pro-Rata LME With Full Participation to Capture Discount, $100M New Money

Wellness Pet has closed the second stage of a non-pro-rata liability management transaction with 100% participation from lenders across the capital structure, according to sources. The transaction involves a $100 million new-money injection and a discounted debt exchange into newly created term loan tranches with maturities pushed out to 2029, as reported.

The Clearlake-owned pet product retailer last month completed private debt exchanges with a majority ad hoc group of creditors, where ad hoc group first lien members were able to exchange 90% of par, split between 51% in a new first lien, first-out tranche due December 2029 and 39% into a new first lien, second-out paper due December 2029, sources noted.

The subsequent public offer launched to all the remaining term loan lenders features lower exchange rates, with a mixed rate of 80% split between 46% in the new FLFO and 34% in FLSO for existing 1L loanholders, according to sources. Second lien lenders can swap at 70% of par and receive 30% in the FLSO tranche and 40% in cash, according to sources.

Sources noted that sponsor Clearlake also owned some positions in Wellness Pet’s second lien debt and had agreed to swap all of their existing holdings at par into a new first lien, third-out tranche, potentially priming any nonparticipating lenders at the bottom of the totem pole, according to sources. The transactions were completed last week with a final full participation from both first lien and second lien lenders, sources added.

Wellness announced the closing of the initial transaction on May 30 with “unanimous support from ABL lenders, nearly 80% support from first lien term loan lenders, and over 90% support from second lien term loan lenders,” Octus previously reported.

As part of the initial deal, Wellness Pet extended the maturity of its $150 million ABL by four years to October 2029, according to sources. There was $30 million outstanding on the ABL as of March 31. The company also secured $100 million in new money in the form of first-out debt from existing lenders to replenish balance-sheet cash. The new-money offer was open to all the lenders, sources added.

Octus, formerly Reorg, reported in December 2024 that the majority creditor group had retained Gibson Dunn and Lazard and signed a cooperation agreement.

An estimate of the company’s capital structure is as follows:
 

The sponsor and company did not return requests for comments.