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Photo: Rafael Henrique/SOPA Images/LightRocket via Getty Images

BC Partners plans to disentangle pet supplies retailer PetSmart from online rival Chewy, via a recapitalization plan.

Why it matters: This reflects PetSmart's improved performance, driven largely by increased pet adoptions during the pandemic. It's also a tacit admission by BC Partners that its original investment thesis was flawed.

  • BC bought Chewy in 2017, in part by piling new debt onto existing portfolio company PetSmart, and then took Chewy public in mid-2019 while retaining almost total voting control.
  • PetSmart would be recapped with $1.3 billion in new equity and its $4.65 billion of debt would be refinanced (with pro forma leverage decreasing from 3.5x/5,6x to 3.2x/4.2x, per LevFin Insights).
  • Commitments are due next Thursday, although there's no guarantee this deal goes through.

The bottom line, via Bloomberg: "The transaction is likely to be seen more favorably by creditors compared to a 2018 deal in which BC Partners put a portion of Chewy’s equity outside the reach of PetSmart lenders."

  • "They argued that PetSmart was insolvent at the time of the transfer, and that the move was thus fraudulent. PetSmart eventually got a majority of its lenders to approve amendments to their documents to squash the dispute."

Go deeper

2 hours ago - Health

NYC to impose vaccine mandate on private employers

New York City Mayor Bill de Blasio (D) on Monday announced a new COVID vaccine mandate for all private companies.

Why it matters: De Blasio, speaking on MSNBC's "Morning Joe," said the "first-in-the-nation measure" will go into effect starting Dec. 27. It will apply to approximately 184,000 businesses.

D.C.-Beijing tensions are shifting markets

Illustration: Aïda Amer/Axios

U.S. markets stand to lose $2 trillion in value if D.C. and Beijing drift further apart.

Why it matters: Political chasms are showing up in new securities regulations that put companies and investors in a bind. The rules are also another reflection of how much relations between the world’s largest economies have cooled, even as they remain economically interdependent. 

5 hours ago - Health
Axios Investigates

Documents reveal the secrecy of America's drug pricing matrix

Illustration: Aïda Amer/Axios

American businesses spend hundreds of billions of dollars a year on prescription drugs, and the bills keep getting bigger. But some of the companies promising to help rein in those costs prevent employers from looking under the hood.

Why it matters: Documents provided to Axios reveal a new layer of secrecy within the maze of American drug pricing — one in which firms that manage drug coverage for hundreds of employers, representing millions of workers, obscure the details of their work and make it difficult to figure out whether they're actually providing a good deal.