Department store chain Belk to file for Chapter 11 chapter, private equity firm Sycamore to retain control

Belk division store

John Greim | LightRocket | Getty Images

The division store chain Belk introduced Tuesday afternoon it plans to file for Chapter 11 chapter safety, marking the newest mall-based retailer to accomplish that as its gross sales have dwindled and challenges have accelerated throughout the Covid pandemic.

The North Carolina-based retailer mentioned it would enter right into a restructuring help settlement with its majority proprietor, private equity firm Sycamore Partners, together with the holders of greater than 75% of its first-lien time period mortgage debt, and holders of 100% of its second-lien time period mortgage debt.

The plan, Belk mentioned, is to recapitalize its enterprise, slash its debt burden by roughly $450 million, and prolong the maturities on all of its time period loans to July 2025. Sycamore will retain majority control of Belk as a part of the settlement, it mentioned.

The firm mentioned it has acquired financing commitments for $225 million in new capital from Sycamore, KKR and Blackstone, together with a few of its present first-lien time period lenders. The retailer mentioned that it plans to preserve paying its distributors and that every one regular enterprise operations will proceed throughout the restructuring course of.

It hopes to exit Chapter 11 chapter by the tip of February.

“We’re confident that this agreement puts us on the right long-term path toward significantly reducing our debt and providing us with greater financial flexibility to meet our obligations and to continue investing in our business, including further enhancements and additions to Belk’s omnichannel capabilities,” Belk CEO Lisa Harper mentioned in an announcement.

America’s division store operators — together with Belk and its almost 300 shops primarily within the Southeast — have struggled as shoppers are usually not frequenting malls as typically and are shopping for much less attire throughout the pandemic.

Last yr, Neiman Marcus, J.C. Penney, Stage Stores and Lord & Taylor filed for chapter. The latter, the oldest division store chain within the nation, ended up liquidating and shutting all of its shops. Penney narrowly escaped that very same end result after U.S. mall house owners Simon Property Group and Brookfield Property Partners acquired it.

Sycamore, a firm that makes a speciality of client and retail investments, additionally just lately bought the Ann Taylor, Loft, Lou & Grey, and Lane Bryant ladies’s attire manufacturers out of chapter from Ascena Retail Group.

Here’s the total press launch from Belk.

CORRECTION: This story has been up to date to say Belk introduced its plans to file for Chapter 11 chapter. A earlier model misstated the corporate had already filed.

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Written by Business Boy


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