Ares and CPPIB-owned 99 Cents Only Stores closes recap deals

99 Cents Only Stores LLC, a Commerce, California-based discount retailer, has completed recapitalization deals intended to eliminate US$300 million of debt and enhance the company’s liquidity position.

As part of the transactions, 99 Cents Only Stores and its sponsors, Ares Management and Canada Pension Plan Investment Board (CPPIB), entered into stakeholder agreements to convert all second lien debt and 92.1 percent of third lien debt into new preferred and common equity.

Following the transactions, Ares and CPPIB continue to hold 73 percent ownership and majority control.

Ares and CPPIB acquired 99 Cents Only Stores in 2012 for US$1.6 billion.

PRESS RELEASE

99 Cents Only Stores LLC Announces Completion Of Recapitalization Transactions

Recapitalization eliminates approximately $300 million of debt, reduces annual interest expense burden by approximately $15 million and provides $34 million cash infusion to the Company

LOS ANGELES, July 18, 2019 /PRNewswire/ — 99 Cents Only Stores LLC (the “Company”) has announced the completion of recapitalization transactions designed to improve the Company’s balance sheet and enhance its liquidity position.

As part of the recapitalization transactions, the Company and its equity sponsors, Ares Management and Canada Pension Plan Investment Board (the “Sponsors”), entered into agreements with various stakeholders under which all of the Company’s second lien debt and 92.1% of its third lien debt was converted into new preferred and common equity of Number Holdings, Inc., the parent of the Company (“Parent”). Following the recapitalization transactions, the Sponsors continue to hold 73% ownership and majority control of the Company. In addition, as part of the recapitalization transactions, the Company received a new cash equity infusion of $34 million from Ares Management and several institutional investors that had previously held the Company’s third lien debt, further validating the confidence felt around the Company’s future growth prospects.

Commenting on the completion of the recapitalization transactions, Ash Walia, the Company’s Chief Financial Officer, said, “The completion of this recapitalization is a significant milestone and truly a game-changer for the future of 99 Cents Only Stores. These transactions demonstrate the strong support and continued confidence of our key stakeholders. In addition, the recapitalization significantly deleverages our balance sheet and improves the Company’s liquidity position by eliminating approximately $300 million of net secured debt and reducing our cash interest burden by approximately $15 million per year. Importantly, as part of the recapitalization, the Company has received a $34 million cash equity infusion from Ares Management and a number of institutional investors that had previously been third lien noteholders. The combination of our enhanced capital structure and the boost to our liquidity position will help enable us to make strategic investments across the business, execute our profitable growth initiatives and continue to provide everyday extreme value offerings that delight customers.”

In order to support the recapitalization transactions, the Sponsors exchanged the second lien debt of the Company they held pre-recapitalization into new preferred and common equity of Parent and cancelled the common and preferred equity in Parent they held pre-recapitalization.

RBC Capital Markets acted as financial advisor, and Milbank LLP acted as legal advisor, to the Company in connection with the recapitalization transactions.

About 99 Cents Only Stores LLC
Founded in 1982, 99 Cents Only Stores LLC is the leading operator of extreme value stores in California and the Southwestern United States. The Company currently operates 387 stores located in California, Texas, Arizona and Nevada. 99 Cents Only Stores LLC offers a broad assortment of name brand and other attractively priced merchandise and compelling seasonal product offerings. For more information, visit www.99only.com.

Investor Contact:
Addo Investor Relations
Lasse Glassen
(424) 238-6249
lglassen@addoir.com