Restructuring splits creditors and deepens concerns about long-term viability
Saks Secures Emergency Funding: The luxury retailer landed a $600 million debt deal to stay afloat after recent financial struggles.
Split Among Creditors: Some lenders will take losses and lose repayment priority, while others—mostly those who backed Saks’ recent bond deal—get repaid first.
Risky Bond Swap: Creditors can exchange their existing bonds for lower-ranked debt, but with the same interest rate and maturity. Those who don’t join the deal face fewer protections.
In a bid to stabilize its post-merger future, Saks Global Enterprises has secured a $600 million debt deal, offering short-term relief while deepening tensions among its creditors. The complex agreement arrives just six months after the company issued $2.2 billion in bonds to finance its high-profile acquisition of Neiman Marcus and Bergdorf Goodman.
The new financing splits into two tranches: a $300 million upfront loan from a group holding a slim majority of Saks’ recent bond issue, and a second $300 million open to other lenders through a bond exchange. But there’s a catch: creditors who don’t participate in the swap will find their debt pushed to the bottom of Saks’ capital structure, losing critical safeguards and recovery potential.
The restructuring forces some bondholders to accept losses while elevating others in the repayment line. The majority group, advised by Lazard and Paul Weiss, avoids taking a haircut and will be first in line if the company defaults. Meanwhile, minority lenders face diminished returns and weakened positions, underscoring the rising trend of creditor-on-creditor violence in distressed retail.
Issued at an 11% fixed coupon, the loan reflects both the urgency and risk of the moment. Once seen as a confident bet on Saks’ luxury growth strategy, the original bonds have since plunged to 34.5 cents on the dollar—a sharp reversal that signals fading market faith.
While Saks confirmed the financing on Friday, it declined to comment on the specific terms of the restructuring. The deal may offer a temporary cushion, but looming payments, softening sales, and a fragile post-merger identity continue to challenge the luxury retailer’s long-term outlook. For now, the lifeline buys time. But whether Saks can translate that time into stability remains the unanswered—and urgent—question.