Dave & Buster’s Taps Moelis to Aid on Debt as Distress Deepens

(Bloomberg) -- Dave & Buster's Entertainment Inc. has tapped Moelis & Co. to help address its $1.5 billion debt as a slump in leisure spending is pushing it further into distress, according to people familiar with the matter.

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Separately, a consortium of the company's creditors is working with PJT Partners and Gibson Dunn & Crutcher, said the people, who asked not to be identified discussing a private matter. The group has executed a cooperation pact and is now seeking signatures to broaden support, other people said.

The pact is the latest effort by the struggling entertainment company's creditors to fend off infighting that tends to pit lenders against each other, often to the detriment of minority debt holders.

Dave & Buster's is among a growing number of companies caught up in a punishing selloff for consumer-facing names, which have been dogged by rising prices and borrowing costs squeezing consumers' discretionary budgets.

The arcade chain's debt is split between term loans and a revolving credit facility as of Aug. 4, according to public disclosures. Its $691 million term loan due in 2029 was quoted at 55.875 cents on the dollar Wednesday, down from 93.75 cents on Feb. 17, according to data compiled by Bloomberg.

Moelis declined to comment while Dave & Buster's didn't respond to a request for comment. A representative with PJT declined to comment on organization, while messages left with Gibson Dunn were not returned.

Moody's Ratings changed its outlook on Dave & Buster's debt to negative from stable in September, while keeping its B3 corporate rating, citing its weak interest coverage, high leverage and a sluggish financial performance.

The entertainment and leisure company is struggling to bring in foot traffic, as same-store-sales declined 2.9% in the second—quarter from a year earlier, according to regulatory filings. The company booked $98.9 million of adjusted earnings in the three-month period, versus $129.8 million year-over-year.

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