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Neiman Marcus, Creditors Reach Crucial Agreement in Debt-Restructuring Talks

March 04, 2019, 08:00 AM
Filed Under: Retail

Luxury retailer Neiman Marcus Group LTD LLC announced that it has made significant progress in refinancing discussions and has reached an agreement in principle with majority holders of each of the Company’s term loans and unsecured notes on the framework of a comprehensive amend and extend transaction.

The current framework contemplates three-year maturity extensions on the Company’s credit facilities and unsecured notes and, if implemented, will provide the Company with ample runway to execute on and complete its transformation plan into a customer-centric luxury platform. Any agreement remains subject to final documentation.

All term lenders and nearly all noteholders that have engaged in negotiations with the Company have re-executed confidentiality agreements with the Company with the goal of documenting and completing a transaction on the agreed terms. 

"The Company will continue to work diligently with its advisors, sponsors, lenders and noteholders towards a resolution that is beneficial for all stakeholders," said Neiman Marcus, in a prepared statement. "The fundamentals of Neiman Marcus Group’s business remain strong and continue to improve. The Company expects to report that it recently completed its sixth consecutive quarter of comparable revenue growth. The Company’s plan to transform the business is gaining momentum."

According to a report from the Dallas Morning News, the retailer has been saddled with debt from two leveraged buyouts in 10 years and hasn't had the cash flow to run its business or try to begin repaying almost $5 billion in debt held by bondholders and term loan lenders. The company's annual interest payments are $300 million.

Beginning on or around February 13, 2019, Neiman Marcus Group resumed confidential discussions and negotiations under separate Confidentiality Agreements with the Noteholders and the Term Lenders. As part of such discussions and negotiations, on February 13, 2019, the Company made presentations to the Noteholders and the Term Lenders.

The Company also disclosed to the Noteholders and the Term Lenders that, for the second fiscal quarter ended January 26, 2019, it expects to report an increase in comparable revenues on a U.S. basis of 0.5% to 1.0% from the second quarter of fiscal year 2018, representing the sixth consecutive quarter of comparable revenue increases.  In addition, year-to-date Adjusted EBITDA through the second quarter of fiscal year 2019 is expected to be generally consistent with previously disclosed expectations.  These are preliminary estimates, which are based on the most current information available to management as of the date of this current report, and such estimates are subject to the completion of the Company’s quarter-end financial closing procedures.


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