Guggenheim Partners is talking to lenders, including private credit firms, to gauge their interest in financing the potential $6.6 billion buyout of U.S. department store chain Macy’s Inc. by investment firms Arkhouse Management Co. and Brigade Capital Management.
The funding could include at least $1.4 billion of debt, spread over multiple transactions tied to different types of collateral, according to people with knowledge of the matter. Guggenheim is seeking a $650 million loan at the operating company level, said the people, asking not to be identified as the details are private. That financing would be a type of debt known as “first in, last out,” and would be in addition to a large asset-based loan from a bank.
Meanwhile, Guggenheim is sounding out investors for debt backed by the department store-operator’s real estate, which could total more than $700 million to be financed through the commercial mortgage-backed securities market, according to the people. Another slice of debt tied to the company’s properties could be added on top of that, said the people.
The conversations are preliminary and financing details may change, the people said. Additional funding may be necessary, with specifics for that borrowing determined later, they noted.
Representatives for Macy’s, Guggenheim, Arkhouse and Brigade declined to comment.
The lender outreach comes after Macy’s initially rebuffed a bid of $21 a share from Arkhouse and Brigade in January, saying it lacked “compelling value.” The firms returned in March with an improved offer of $24 a share. Macy’s recently opened its books to the buyout firms and named two new directors nominated by Arkhouse, which agreed to end its effort to seek majority board representation.
New York-based Macy’s, which also owns Bloomingdale’s and Bluemercury, has struggled to compete as long-term shopper preferences shift toward online retailers and away from department stores. Its possible buyout by Arkhouse and Brigade has an estimated enterprise value of more than $11.5 billion, including debt, according to data compiled by Bloomberg.
Carmen Arroyo and Reshmi Basu, Bloomberg , 2024-05-08 16:50:59
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