FINANCE

Barneys lands new lenders for better financing

BY Marianne Wilson

Barneys New York has secured new financing to continue operations as it looks for a white knight.

The famed luxury retailer, which filed for bankruptcy protection on August 6, announced it has secured approximately $218 million in new financing from Brigade Capital Management and B. Riley Financial. The new agreement, which will refinance all of Barneys’ existing secured indebtedness, replaces the company’s previously announced $75 million agreement with affiliates of Hilco Global and the Gordon Brothers Group.

In other developments, Barneys said that the bankruptcy court gave the green light for all of  the retailer’s “first-day” motions that were filed on Tuesday, giving Barneys interim approval to immediately access $75 million of its new financing to meet its “go-forward” financial commitments and continue operations.

The court also gave Barneys the authority to continue payment of employee wages and benefits and honor customer payments and orders.  The retailer will pay trade vendors, manufacturing partners and suppliers for goods and services provided on or after the filing date of August 6, 2019.

“We are pleased to partner with Brigade Capital and B. Riley Financial, whose substantial financial commitment will better support Barneys New York as we continue to offer a unique customer experience, strengthen our relationships with our vendors and conduct a sale process to position Barneys New York for the long-term,” said Daniella Vitale, CEO and president, Barneys. “This significantly enhanced financing commitment demonstrates the belief of Brigade Capital and B. Riley Financial in the value of the Barneys New York brand and business.”

Vitale continued, “I would also like to thank Hilco Global and the Gordon Brothers Group for their interest and professionalism. The competition to provide Barneys New York with fresh capital – a substantial amount of which is being provided on a junior basis – reinforces our confidence in achieving a value enhancing transaction.”

Brigade Capital is a global investment management firm. B. Riley Financial is a diversified financial services company whose holdings include liquidation firm Great American. Both bring deep retail sector expertise in the leveraged finance market, Barneys said.

As reported in Chain Store Age, Barneys filed for bankruptcy with a plan to significantly reduce its store footprint. It plans to close its stores in Chicago, Seattle and Las Vegas and Seattle, along with five smaller format stores and seven Warehouse locations. The company will be left with five flagships, including its celebrated outpost on Manhattan’s Madison Avenue, which accounts for nearly half of its total revenue, along with locations in downtown Manhattan, San Francisco, Boston and Beverly Hills, Calif. , as well as Warehouse stores at Woodbury Common Premium Outlets (Woodbury, New York) and at San Francisco Premium Outlets (Livermore, California). Its two e-commerce sites will also remain open.

In July, it was announced that Barneys would open a location at Bal Harbour Shops in Miami, with the 57,000-sq.-ft. store serving as an anchor for the 300,000-sq.-ft. expansion to the center. The Miami Herald reported that Barneys is moving forward with the project. The retailer is also scheduled to open a store at the long-delayed American Dream retail and entertainment mega-center in East Rutherford, New Jersey.  However, the future of both locations may be uncertain as the bankruptcy proceedings will involve a review of leases.

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