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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowMacy’s is exploring ways to use its real estate to secure fresh cash and ride out the coronavirus pandemic.
The department store chain would issue new bonds backed by certain property and other assets to bolster its liquidity, according to people with knowledge of the situation. The Herald Square property wouldn’t be included.
The interest rate and maturity of the debt is still under discussion, and plans could change based on investor response, the people said, asking not to be identified discussing a private matter.
Macy’s is “exploring numerous options to strengthen our capital structure,” the company said in a statement.
“We have relationships with a range of advisers.”
Macy’s is working with law firm Kirkland & Ellis and investment bank Lazard Ltd., which are advising on liability management and financing options, the people said.
Representatives for Kirkland and Lazard didn’t immediately return messages seeking comment.
Macy’s has furloughed most of its workforce starting this month in a bid to preserve cash. The closure of all 775 of its physical stores has caused a sharp decline in revenue, putting severe pressure on its finances.
It’s another sign that the company’s turnaround plan, announced earlier this year, is on hold. Macy’s recently said it’s drawing down its line of credit while deferring capital spending, extending payment terms and evaluating financing options.
CEO Jeff Gennette is forgoing a cash salary, and finance chief Paula Price is leaving her role in May.
“While the digital business remains open, we have lost the majority of our sales due to our store closures,” Macy’s said in its statement. The company has sufficient liquidity to manage operations through the downturn, Bloomberg Intelligence said in a recent note.
Some of Macy’s rivals have already bolstered their financial positions amid the pandemic.
Nordstrom Inc amended its $800 million line of credit backed by inventory and said it closed a $600 million 8.75% secured-debt offering.
Kohl’s Corp. entered into a $1.5 billion asset-based revolving-credit facility, refinancing a $1 billion facility.•
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