By Michelle Cheng and Gowri Gurumurthy | Updated on Jun 09, 2026 at 05:19 PM
Shutterfly has sweetened terms on a portion of a critical debt refinancing, in a bid to assuage investors spooked by potential AI disruption and widening losses.
The Apollo Global Management Inc.-backed firm offered creditors a raft of concessions on its $1.15 billion junk bond, according to documents seen by Bloomberg. Among the sweeteners, Shutterfly materially restricted its ability to pay dividends, make investments and ship money beyond investors’ reach, the documents showed.
The company also capped how much it can boost its earnings with hypothetical future savings or one-time expenses — known in the market as add-backs — according to the documents.
The concessions show that even the bond’s sizable 12% yield — one of the steepest in the junk-bond market this year — wasn’t quite enough to counter investor skepticism surrounding AI. Shutterfly had also sought to assure creditors that its business model is insulated because it relies on physical, personalized merchandise like photo books, pillows and magnets, according to its bond documents.
Prior to the latest concessions, some investors willing to buy the debt had drawn a hard line on terms, warning they wouldn’t accept any tightening of the yield, according to people familiar with the matter who asked not to be identified discussing private information. Still, the deal — expected to price on Wednesday — was oversubscribed, other people said.
Representatives for Apollo and Barclays Plc — which is running the debt deal — declined to comment. A representative for Shutterfly didn’t immediately respond to a request for comment.
Read More: Shutterfly Eyes $1.9 Billion Junk Deal to Tackle Debt Pile
The refinancing also includes a $500 million term loan marketed at one of the highest premiums so far this year. The facility has been offered at 6.5 percentage points over the benchmark rate at a discounted price of 96 cents to 97 cents on the dollar in early price discussions. Commitments for the loan are due on Wednesday. The refinancing also includes a $225 million second-lien term loan.
The threat of AI has upset credit markets broadly in recent months, as investors fear it could render certain software companies obsolete. Despite outlining its resistance to AI, Shutterfly said in its bond documents that factors including an “ongoing trend toward increased video consumption and AI-enabled image creation,” will impact the business.
Compounding the anxieties are its financials. The company reported an Ebitda loss of $19.7 million for the three months through March, widening from the $17.2 million loss it posted for the same period a year earlier, according to the documents. Net revenue was $313.5 million, down 8% year-over-year.
On an adjusted basis, the company posted Ebitda of roughly $400,000 for the same three months, compared to a $1.5 million loss for the prior year. Shutterfly also has total liquidity of $474 million and an undrawn revolver, according to another person familiar with the matter.
Read More: Apollo-Backed Shutterfly in Talks with Creditors to Raise Money
Shutterfly is staring down a rapid succession of maturities on its borrowings and had total debt standing at $2.4 billion at the end of March, the bond documents show.
The company, acquired by Apollo’s private equity arm in a 2019 leveraged buyout, has had a bumpy ride in debt markets, including a 2023 transaction that Moody’s Ratings labeled a distressed debt exchange.
Banks including Barclays stepped in after a private credit group led by General Atlantic had been in talks to provide debt for Shutterfly’s refinancing, Bloomberg reported in October.
Shutterfly’s business is highly seasonal and dependent on fourth-quarter earnings to offset operating losses in the first nine months of the year, according to a Moody’s report earlier this month.
“Shutterfly’s cash flow and operating metrics have improved since its debt exchange two years ago, and we expect further improvement over the next 12-18 months,” analysts at the ratings agency wrote.
Shutterfly is only the second firm to offer high-yield bonds with such a high premium this year, according to data compiled by Bloomberg. RR Donnelley & Sons Co., a marketing-and-packaging firm, sold a $900 million five-year note at a roughly 12.4% yield in May.