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Neiman Marcus advances chapter preparations, sources say

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A contractor enters a Neiman Marcus Group Ltd. retailer on the Hudson Yards improvement in New York, U.S., on Tuesday, March 5, 2019.

Demetrius Freeman | Bloomberg | Getty Photographs

Neiman Marcus is stepping up preparations to hunt chapter safety, after the coronavirus pandemic compelled the debt-laden U.S. luxurious division retailer chain to shut its shops, individuals conversant in the matter mentioned on Thursday.

Neiman started holding confidential discussions this week with bondholders about attainable financing that will assist the corporate proceed working whereas beneath chapter safety, the sources mentioned. The corporate has additionally began related discussions in latest days with its lenders, one of many sources mentioned.

Up till this week, Neiman had obtained inquiries from collectors about its subsequent strikes however had not commenced discussions a couple of attainable chapter, a number of the sources mentioned.

Regardless that these talks are advancing, the Dallas-based retailer is a number of weeks away from a possible chapter, and it’s nonetheless attainable that it manages to flee it, the sources mentioned.

Collectors may give Neiman extra time to make upcoming debt funds due this month whereas restructuring discussions proceed, which may end in a transaction that reworks monetary obligations exterior of chapter proceedings, the sources added.

The sources requested to not be recognized as a result of the matter is confidential. Neiman declined to remark. Final month, the corporate mentioned it was “evaluating all programs of motion to protect our monetary energy” due to the coronavirus pandemic.

Neiman reached a deal final yr with collectors to transform debt and keep away from a chapter submitting, gaining extra monetary respiration room. However the coronavirus outbreak compelled the corporate to shut all Neiman, Bergdorf Goodman and Final Name shops it operates via the top of April, and furlough most of its 14,000 workers.

The closures have resulted in a money crunch simply earlier than vital curiosity funds on parts of its greater than $four billion of debt are due beginning April 15.

Parts of Neiman Marcus’s time period mortgage had been buying and selling at roughly 40 cents on the greenback this week, nicely beneath face worth, indicating vital investor issues about compensation, in keeping with Refinitiv Eikon information. The worth for a set of Neiman bonds has additionally fallen.

Neiman has struggled following a $6 billion leveraged buyout by private-equity agency Ares Administration and Canada Pension Plan Funding Board in 2013. Like many conventional brick-and-mortar retailers, it has confronted relentless competitors from e-commerce big Amazon.com. Ares had no quick remark, whereas the CPPIB didn’t instantly reply to a request for remark.

Neiman was capable of persuade collectors to restructure debt final yr with out resorting to chapter proceedings, pushing out due dates on its monetary obligations. However the deal added to the corporate’s curiosity bills on debt, and didn’t deal with its struggling enterprise, which has worsened.

A Neiman chapter submitting would probably be contentious. A trustee for a number of the firm’s bondholders sued Neiman final yr, claiming the corporate and its homeowners robbed traders of the worth of luxurious e-commerce website MyTheresa within the earlier debt restructuring.

“If this storied model information for chapter … MyTheresa will take heart stage,” mentioned Dan Kamensky, managing companion at Marble Ridge Capital LP, one of many bondholders. “The personal fairness homeowners stripped the … MyTheresa asset from the corporate with out paying a dime and leaving a carcass of an organization for its collectors.”

Neiman has mentioned the allegations are meritless and that its dealing with of MyTheresa was correct.

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