Saks Gets $600 Million Lifeline as Creditors Face Steep Losses

Yahoo

27-06-2025

(Bloomberg) -- Saks Global Enterprises has reached a $600 million debt deal with a number of its existing lenders that would force some creditors to accept losses and push them back in the repayment priority line.
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As part of the complex arrangement, a group holding a slim majority of the struggling luxury retailer's $2.2 billion of 11% bonds, which were just issued in December, will provide Saks an immediate $300 million loan, according to deal terms reviewed by Bloomberg. That debt would be among the first repaid if the company goes bust. The retailer operates its flagship Saks Fifth Avenue stores along with Bergdorf Goodman and Neiman Marcus, rival chains it purchased last year.
Lenders that aren't part of that group will have the option to help provide as much as $300 million of additional debt. That would be part of a debt exchange that would see the lenders swapping their outstanding notes for a lesser amount of new, lower priority securities with the same interest rate, a 2029 maturity and collateral.
The majority holders — who would bridge any shortfall in the second $300 million — will also participate in the swap but won't have to take a so-called haircut as part of the transaction. Investors who don't take part in the exchange will see their debt fall to the bottom of Saks' capital structure and lose creditor safeguards known as covenants, according to the deal terms.
A representative for Saks Global declined to comment on the terms of the financing. The company confirmed the deal in a statement Friday without disclosing details of the debt swap.
Just six months ago, investors scooped up the $2.2 billion of notes that are now part of the debt swap in order to finance Saks' takeover of Neiman Marcus. That debt tumbled to a record low 34.5 cents on the dollar Thursday after Bloomberg reported initial details of the exchange, according to the bond-price reporting system known as Trace. Saks plans to make its upcoming interest payment on the notes — about $120 million due June 30.
The transaction is the latest instance of a debt deal pitting creditors against each other in order to score breathing room for a troubled company — and its equity stakeholders. Saks' majority creditors were advised by Lazard Inc. and Paul Weiss Rifkind Wharton & Garrison, while minority creditors were represented by Greenhill & Co. and Glenn Agre Bergman & Fuentes.
Double-Digit Coupon
The up to $600 million loan comes with a fixed 11% coupon, according to people with knowledge of the matter. That's lower than the rate on a separate financing commitment Saks secured in May that will no longer go ahead.
The creditor protections on Saks' new bonds will be slightly stronger than those on the outstanding 2029 notes, according to the deal terms reviewed by Bloomberg. They put limits on Saks' ability to create new subsidiaries that can issue new debt, and they effectively block any possible repeat of a transaction that reshuffles the company's payment priority ranks.
(Updates with company statement in fifth paragraph, loan details in eighth paragraph.)
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