Belk Department Store
John Graeme | Lighterket | Getty Images
As the Wall Street Journal reported, KKR is negotiating with a North Carolina-based department store chain to keep Blackstone and Belk’s other major lenders out of bankruptcy.
The company, its lenders and private-equity firm Seacamor Partners are moving toward arriving at an out-of-court deal, the report said, citing people familiar with the discussions.
Representatives from Belk, KKR and Blackstone did not immediately respond to CNBC’s requests for comment. Sycamore declined to comment.
A deal in this case is not guaranteed, the Journal report warned, but it said Belk’s lenders noted how the Chapter 11 bankruptcy process has proved difficult for many other retail chains during the Kovid epidemic, some Has been forced to liquefy.
KKR and Blackstone are hoping to convert a portion of Belk’s $ 2.6 billion debt into equity, possibly through an out-of-court deal that would allow Seacamore to retain an ownership stake. The report noted that KKR is “reluctant” to go through the bail-in-court insolvency process because of the high fees associated with the filings.
America’s department store operators – including Belk and its nearly 300 stores primarily in the southeast – have struggled as consumers are frequenting malls, and purchasing fewer apparel during the epidemic.
Last year, Neiman Marcus, Jessie Penny, Stage Stores and Lord & Taylor filed for bankruptcy. The latter, the nation’s oldest department store chain, expired and all its stores were closed. Penny narrowly survived the same result after the acquisition of American mall owners Simon Property Group and Brookfield Property Partners.
Sycamore recently purchased the Ann Taylor, Loft and Lane Bryant women’s apparel brands out of bankruptcy from the Assena Retail Group. The private equity firm also owns Staples, which last week offered an undisclosed takeover for Office Depot parent ODP.