Saks Secures $350M in Financing to ‘Fortify' Balance Sheet
Saks Global has gained some extra breathing room.
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The company — which took on a heavy debt load to buy Neiman Marcus in December and has been working to calm bondholders — secured $350 million in financing commitments from SLR Credit Solutions.
That included a $300 million FILO facility that was carved out of Saks' $1.8 billion asset backed lending facility, giving the company ready access to those funds.
Saks also lined up a $50 million secured term loan for some of its subsidiaries.
The SLR financing is expected to be finalized on or before June 30, a date the market has been watching closely as that's when Saks is due to make its first $120 million interest payment on the $2.2 billion in bonds it sold to buy Neiman's.
Saks earlier telegraphed that it was working on the FILO facility and was prepared to make the interest payment.
Keeping to such commitments will help Saks rebuild a little confidence with debt investors, who traded some of the company's bonds for as little as 34 cents on the dollar this week.
'As we have always planned, Saks Global is implementing measures to further bolster liquidity and fortify our balance sheet as we continue executing on our transformation strategy and investing in our business,' said Marc Metrick, chief executive officer, in a statement.
'With the financings announced today, the company will have approximately $700 million in available liquidity on a pro forma basis,' Metrick said. 'Along with synergy realization and business performance exceeding our plans, we are well positioned to continue delivering for all of our stakeholders, including our brand partners.'
Saks' cash reserves started to dwindle in the run-up to the Neiman's deal, causing the retailer to amass a long list of payments owed to vendors. According to a source, the company's past-due payables current amount to $275 million.
Saks has promised to start covering those past-due bills with a year of monthly installment payments, starting in July.
Michael Gross, CEO of SLR Capital Partners, said: 'We're pleased to support Saks Global and its leadership team as they execute on their strategic plan. This financing reflects our confidence in the company's platform and long-term growth trajectory.'
Saks also said that its business continues to see 'improvements in business performance, with inventory receipt flows improving and synergy realization from integration efforts significantly exceeding plan.'
Bondholders are set to get a closer look at the company's books on Friday, when Saks will privately share its financial results.
A debt analyst told WWD that the news of the FILO will make Saks' conference call with bondholders easier, but wondered how much interest the company had to agree to pay to secure the financing.
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