New York: Saks Global Enterprises, the cash-strapped retailer, has skipped an interest payment to bondholders totalling more than US$100mil that was due Tuesday as it looks to negotiate a deal with creditors, according to people familiar with the situation.
The luxury department-store chain is now operating under a grace period amid restructuring talks, said the people, who asked not to be identified discussing a private matter.
A representative for Saks, which is based in New York, declined to comment, as did PJT Partners, which is advising the company.
Saks has been weighing options to shore up liquidity, including raising emergency financing or selling assets.
It was also considering Chapter 11 bankruptcy as a last resort, separate people familiar said last week. Some creditors have been holding talks to assess the company’s cash needs, which may include providing it with a potential debtor-in-possession loan, a form of bankruptcy funding.
The company, whose roots go back more than 150 years, raised billions of US dollars from bond investors last year to pay for a turnaround plan that involved acquiring Neiman Marcus.
In October, however, it cut its full-year guidance after reporting declining sales tied to inventory-management challenges.
The chain operates its flagship Saks Fifth Avenue stores along with Bergdorf Goodman and Neiman Marcus.
It reported a 13% year-over-year drop in revenue to US$1.6bil in the second quarter.
At the time, management said it had been exploring the sale of a minority stake in department store Bergdorf Goodman to raise funds.
The company restructured its US$2.2bil debt load earlier last year, and it has seen its bonds fall sharply in recent weeks ahead of a possible debt restructuring. — Bloomberg
