Hudson’s Bay Co.’s interest in buying the Neiman Marcus Group appears to be alive and gaining support.
Hudson’s Bay Co.’s interest in buying the Neiman Marcus Group appears to be alive and gaining support from the creditor side.
Last Friday, the Dallas-based Neiman Marcus Group filed for Chapter 11 reorganization in the bankruptcy court of the Southern District of Texas, whereby key lenders — TPG Specialty Lending, Pimco and Davidson Kempner Capital Management — would provide debtor-in-possession financing and exit financing in exchange for a controlling equity stake in the company, thereby perpetuating Neiman Marcus Group as an independent operation with a greatly deleveraged balance sheet.
“The fact Neiman’s is bleeding cash means it needs to do something quick,” said one retail source, who thinks the odds are 50-50 that Neiman’s gets sold, is less likely to liquidate, and even less likely to operate under the ownership of the lenders, who have proposed supplying the DIP and post-bankruptcy funds.
“In total, Mudrick estimates $2.8 billion to $4.7 billion of potential value creation roughly half of which is more efficiently realized before Neiman’s emerges through Chapter 11,” the letter said. According to Mudrick, the 13 “duplicative” leased locations account for between $40 million and $50 million in annual rent and related occupancy costs which could be rejected in bankruptcy court.
It’s also possible that the proposed new owners of NMG in the current reorganization plan decide to sell of some of NMG’s assets, such as Bergdorf Goodman or Mytheresa.com.
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