Platinum Gives 18.5% Loan to Retailer and Blindsides Creditors

It’s been just two years since private equity firm Platinum Equity took over Petmate, and already those who bankrolled it are being whiplashed by its mounting distress.

It started when the pet-products retailer was staring down a payment due at the start of this month on a more than $500 million loan that financed the purchase. Seeking to conserve cash, the company was racing to line up fresh financing, according to people familiar with the matter. It was also considering putting off the $15 million payment, a step that would likely set off a round of negotiations with creditors. ...