Luxury retailer Saks Global files for bankruptcy protection
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The news: Luxury US retailer Saks Global, the parent company of Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman, filed for bankruptcy protection in Texas on Wednesday.
The numbers: Saks said that it had secured a financing commitment of around USD1.75 billion ($2.62 billion) in efforts to strengthen its balance sheet. The financing comprises USD1.5 billion from an “Ad Hoc” group of the company’s senior secured bondholders and approximately USD240 million of incremental liquidity from the company's asset-based lenders, according to a statement released Wednesday.
Upon court approval, USD1 billion of debtor-in-possession financing from the Ad Hoc group will provide liquidity to fund Saks’ operations and turnaround initiatives, while an additional USD500 million of financing will be available to the company upon emergence from bankruptcy.
The context: In addition to the Chapter 11 filing, Saks said that it has appointed former Neiman Marcus Group CEO Geoffroy van Raemdonck as its new chief, and that it is evaluating its “operational footprint” to invest where there is the greatest long-term potential.
Saks said that it expects to honour all customer programs and continue its employee payroll and benefits throughout the Chapter 11 process.
The news comes just over a year since Saks acquired department store competitor Neiman Marcus in a USD2.65 billion deal to create a luxury retail powerhouse. However, by December last year the company failed to make an interest payment of more than USD100 million due to holders of its bonds, prompting then-CEO Marc Metrick to step down on 2 January.
The sources: Saks Global, WSJ, Bloomberg, CNBC
