Beleaguered retail chain Saks Global is struggling to line up as much as $1 billion in financing to keep its business afloat during a potential Chapter 11 bankruptcy filing, CNBC has learned.
The luxury chain has been working to secure a “debtor-in-possession” loan, which would allow it to fund operations in the event of a potential bankruptcy filing, people familiar with the matter said. But investors have so far shown little interest in lending Saks the money because they’re skeptical the company can successfully reorganize and pay them back, said the people, who spoke on the condition of anonymity because the discussions are private.
While DIP lenders get repaid before other creditors during bankruptcy proceedings, they don’t always recoup their full investment, and some investors are concerned that could happen if they finance Saks, the people said.
The storied 159-year-old department store, which now owns Neiman Marcus and Bergdorf Goodman, is both a destination and a symbol for luxury fashion, known for offering top brands like Chanel and Dior alongside up and comers like Good American. Across the entire enterprise, Saks Global has more than 70 full-line luxury stores and about 100 off-price locations.
Since Saks missed an interest payment to bondholders late last month, only a “limited number” of investors have shown interest in financing the DIP loan, while a number of others have declined to get involved, the people said.
Saks declined to comment on investor interest in its fundraising efforts.
CNBC
