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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(AMENDMENT NO. ____)(1)
PARTY CITY CORPORATION
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(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
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(Title of Class of Securities)
702145103
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(CUSIP Number)
MICHAEL E. TENNENBAUM
TENNENBAUM & CO., LLC
11100 SANTA MONICA BOULEVARD, SUITE 210
LOS ANGELES, CALIFORNIA 90025
(310) 566-1000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
AUGUST 16, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box: [ ].
(Continued on the following pages)
Page 1 of 7 Pages
(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
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SCHEDULE 13D
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CUSIP NO. 702145103 PAGE 2 OF 7
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
TENNENBAUM & CO., LLC
IRS NO.: 95-4587347
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 3,096,000 SHARES(1)
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
3,096,000 SHARES(1)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,096,000 SHARES(1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.9%(2)
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14 TYPE OF REPORTING PERSON*
CO
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(1) SHARES ARE ISSUABLE UPON EXERCISE OF THE WARRANT (DESCRIBED IN ITEMS 3
AND 4 BELOW).
(2) BASED ON 12,455,538 SHARES OF COMMON STOCK OUTSTANDING AS OF AUGUST 16,
1999, AS REPRESENTED BY PARTY CITY CORPORATION IN THE SECURITIES
PURCHASE AGREEMENT (DESCRIBED IN ITEMS 3 AND 4 BELOW) AND COMPUTED IN
ACCORDANCE WITH RULE 13d-3(d)(1).
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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SCHEDULE 13D
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CUSIP NO. 702145103 PAGE 3 OF 7
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
MICHAEL E. TENNENBAUM
S.S. NO.: ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 3,096,000 SHARES(1)
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
3,096,000 SHARES(1)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,096,000 SHARES(1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.9%(2)
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14 TYPE OF REPORTING PERSON*
IN
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(1) SHARES ARE ISSUABLE UPON EXERCISE OF THE WARRANT (DESCRIBED IN ITEMS 3
AND 4 BELOW).
(2) BASED ON 12,455,538 SHARES OF COMMON STOCK OUTSTANDING AS OF AUGUST 16,
1999, AS REPRESENTED BY PARTY CITY CORPORATION IN THE SECURITIES
PURCHASE AGREEMENT (DESCRIBED IN ITEMS 3 AND 4 BELOW) AND COMPUTED IN
ACCORDANCE WITH RULE 13d-3(d)(1).
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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PAGE 4 OF 7
ITEM 1. SECURITY AND ISSUER.
This statement relates to the beneficial ownership of 3,096,000 shares
of Common Stock, par value $.01 per share ("Common Stock"), of Party City
Corporation, a Delaware corporation ("Party City"). The principal executive
offices of Party City are located at 400 Commons Way, Rockaway, New Jersey
07866.
ITEM 2. IDENTITY AND BACKGROUND.
Tennenbaum & Co., LLC is a limited liability company organized under the
laws of the State of Delaware ("TCO"). TCO's address is 11100 Santa Monica
Boulevard, Suite 210, Los Angeles, California 90025. The principal business of
TCO is managing assets and monitoring services. TCO's managing member is Michael
E. Tennenbaum, a United States citizen, who has the same address. Mr.
Tennenbaum's principal occupation is serving as managing member of TCO. TCO and
Mr. Tennenbaum are collectively referred to herein as the "Reporting Persons."
During the last five years, the Reporting Persons have not been (i)
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of the proceeding
were or are subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The statement relates to the acquisition by the Reporting Persons of a
warrant dated as of August 16, 1999 (the "Warrant") to purchase 3,096,000 shares
of Common Stock of Party City. Party City issued the Warrant pursuant to that
certain Securities Purchase Agreement between Party City and TCO dated as of
August 16, 1999 (the "Securities Purchase Agreement"). The Warrant was acquired
by the Reporting Persons along with certain secured notes of Party City in the
aggregate principal amount of $6,750,000. The aggregate purchase price for the
Warrant and such secured notes was $6,750,000. The source of funds for the
purchase of the Warrant and the secured notes was a margin account of the
Reporting Persons with Jeffries & Company, Inc. Upon exercise of the Warrant in
full, TCO must pay an exercise price of $3.00 per share for an aggregate
exercise price of $9,288,000. It is presently anticipated that the source of
funds for the exercise price will be TCO's general working capital or the
working capital of an affiliate.
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Persons acquired the Warrant for investment purposes. They
intend to monitor and evaluate the investment on a continuing basis; and based
upon their evaluation from time to time, they may, subject to the terms of the
Investor Rights Agreement (defined below), acquire additional shares of Common
Stock of Party City, dispose of the Warrant or the underlying shares of Common
Stock beneficially owned by them, submit one or more proposals for the
consideration of management of Party City, and/or communicate with other
stockholders of Party City.
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PAGE 5 OF 7
Party City, Party City's Chairman and Chief Executive Officer, TCO and
certain other purchasers of secured notes and/or warrants of Party City have
entered into an Investor Rights Agreement dated as of August 16, 1999 (the
"Investor Rights Agreement"), pursuant to which a certain Party City board
member has resigned as a director of Party City and a nominee of TCO, Howard
Levkowitz, and a nominee of the Other Purchasers, Matthew R. Kahn, have become
directors of Party City.
Except as set forth above, the Reporting Persons have no plans or
proposals that relate to or would result in any of the matters referred to in
paragraphs (a) through (j), inclusive, of Item 4 of Schedule 13D. The Reporting
Persons, however, may at any time and from time to time, review or reconsider
their position with respect to any of such matters.
The foregoing description of the Warrant, the Securities Purchase
Agreement and the Investor Rights Agreement is qualified in its entirety by
reference to the form of Warrant, form of Securities Purchase Agreement and
Investor Rights Agreement, copies of which have been filed as exhibits to Party
City's Current Report on Form 8-K filed with the Securities and Exchange
Commission on August 25, 1999 (File No. 0-27826) and are incorporated by
reference herein.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The shares of Common Stock identified in Item 1 issuable upon exercise
of the Warrant constitute approximately 19.9% of the outstanding Common Stock of
Party City, based upon the Company's representation in the Securities Purchase
Agreement of its outstanding shares of Common Stock as of August 16, 1999 and
computed in accordance with Rule 13d-3(d)(1). Upon exercise of the Warrant, TCO
will have the sole power of voting and disposition with respect to the shares of
Common Stock issuable upon such exercise. By reason of his position as managing
member of TCO, Mr. Tennenbaum may be deemed to share such powers of voting and
disposition.
Except as described in this statement, the Reporting Persons have not
effected transactions in Party City's Common Stock within 60 days prior to the
date of this statement.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Except for the Warrant, the Securities Purchase Agreement, the Investor
Rights Agreement and related documents executed in connection therewith, to the
knowledge of the Reporting Persons, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) between the Reporting
Persons and any other person with respect to any securities of Party City,
including, but not limited to, transfer or voting of any of the securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or withholding
of proxies.
Copies of the form of Warrant, form of Securities Purchase Agreement and
Investor Rights Agreement have been filed as exhibits to Party City's Current
Report on Form 8-K filed with the Securities and Exchange Commission on August
25, 1999 (File No. 0-27826) and are incorporated by reference herein.
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PAGE 6 OF 7
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Form of Warrant, dated August 16, 1999, of Party City
Corporation, incorporated herein by reference to Exhibit
4.1 to Current Report on Form 8-K of Party City
Corporation filed with the Securities and Exchange
Commission on August 25, 1999 (File No. 0-27826).
Exhibit 2 Form of Securities Purchase Agreement, dated August 16,
1999 by and between Party City Corporation and
Tennenbaum & Co., LLC., incorporated herein by reference
to Exhibit 4.6 to Current Report on Form 8-K of Party
City Corporation filed with the Securities and Exchange
Commission on August 25, 1999 (File No. 0-27826).
Exhibit 3 Investor Rights Agreement, dated August 16, 1999 by and
between Party City Corporation, Tennenbaum & Co., LLC,
TCO/Party City, LLC, Enhanced Retail Funding, LLC,
Goldman, Sachs & Co., Goldman Sachs Credit Partners
L.P., and Richmond Associates, L.P., incorporated herein
by reference to Exhibit 10.1 to Current Report on Form
8-K of Party City Corporation filed with the Securities
and Exchange Commission on August 25, 1999 (File No.
0-27826).
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PAGE 7 OF 7
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: August 26, 1999 /s/ Michael E. Tennenbaum
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Michael E. Tennenbaum, individually
and as managing member of
Tennenbaum & Co., LLC
