Neiman Marcus confirms $1.1 billion refinancing

By

Robin Driver

Published
Mar 31, 2021

Dallas, Texas- based department store owner Neiman Marcus Holding Company, Inc. announced on Tuesday that it has completed the refinancing of a significant portion of its exit facilities with the sale of $1.1 billion of new 7.125% senior secured notes due 2026, confirming earlier reports concerning its efforts to repay its borrowings.

 
Neiman Marcus said that it has used the proceeds from the refinancing transaction to repay a total of around $871.8 million which was outstanding under its first-in, last-out term loan facility, its term loan credit facility, and its senior secured floating rates due 2025. The group also paid related interest, premiums and expenses.
 
According to the company, it will use the rest of the proceeds from the transaction for “general corporate purposes,” which include the repayment of the $75.0 million currently outstanding under its $900-million asset-based revolving credit facility. Following this repayment, Neiman Marcus’ outstanding net debt will total around $850 million.

The group said that the refinancing puts it in a position to pursue long-term profitability, having assured the company a simplified capital structure, lowered interest payments by more than $30 million per year, extended debt maturities to 2026, improved financial flexibility, and strengthened liquidity.
 
“This refinancing validates the momentum we are seeing as we continue to execute on our strategic transformation plan amidst improved market conditions,” said Neiman Marcus Group EVP and CEO Brandy Richardson in a release. “Confidence from our investors is reflected in final pricing terms and the size of the offering. We have additional financial flexibility as we invest in our supply chain, elevate our digital excellence and deliver unparalleled luxury experiences.”
 
Reports citing a confidential offering memorandum concerning Neiman Marcus’ refinancing first appeared last week. According to the company, the transaction was initially sized at $1 billion, but was increased to $1.1 billion due to demand from institutional investors.
 
Neiman Marcus filed for bankruptcy in May 2020 and emerged from the process in September, with its three senior lenders – Pacific Investment Management Company LLC (Pimco), Davidson Kempner Capital Management, and Sixth Street Partners – swapping debt for equity and becoming the retailer’s new owners.
 
The reorganization plan implemented as part of this process saw Neiman Marcus eliminate around $4.4 billion in debt and $200 million in annual interest payments. At the time, the group also received a $900 million asset-backed loan, a $750 million exit financing package and a first-in, first out facility.
 
However, the retailer has continued to experience problems due to heavy interest payments on its remaining debt and declines in its revenues. According to the Neiman Marcus memorandum cited by WWD by last week, the company’s revenues totaled $1.63 billion in the six-month period ended January 2021, down from $2.42 billion in the same period in the previous year.
 
Neiman Marcus currently operates 37 namesake stores, two Bergdorf Goodman locations, and five Last Call stores.