Macy’s announced the closing on approximately US$ 4.5 billion of new financing, including its previously announced US$ 1.3 billion of 8.375 percent senior secured notes, as well as a new US$ 3.15 billion asset-based credit agreement.
In addition, the company has amended and substantially reduced the credit commitments of its existing US$ 1.5 billion unsecured credit agreement. The company intends to use the proceeds of the notes offering, along with cash on hand, to repay the outstanding borrowings under the existing US$ 1.5 billion unsecured credit agreement.
With the closing of these financings, the company expects to have sufficient liquidity to address the needs of the business, including funding operations and the purchase of new inventory for upcoming merchandising seasons, resolving its accrued payables obligations, and repaying upcoming debt maturities in fiscal 2020 and fiscal 2021.
“We are pleased with the strong demand from new investors in our notes issuance, which allowed us to tighten pricing and increase the size of the offering. The high quality of our real estate portfolio positioned us well to execute this offering. Additionally, the continued commitment from our bank group allowed us to more than double the size of our existing revolving credit facility. Together, the notes offering and asset-based credit agreement provide Macy’s, Inc. with approximately US$ 4.5 billion of borrowings and commitments, giving us sufficient flexibility and liquidity to navigate our current environment and fund our business for the foreseeable future,” said Jeff Gennette, Chairman and Chief Executive Officer of Macy’s, Inc. “Combined with our ongoing Polaris initiatives, we are confident this liquidity will ensure Macy’s, Inc. remains a strong company to work for, invest in and partner with.”
Macy’s, Inc. closed on its previously announced 8.375 percent senior secured notes offering of US$ 1.3 billion. The notes will mature in June 2025. The notes were issued by Macy’s and are secured on a first-priority basis by (i) a first mortgage/ deed of trust in certain real property of subsidiaries of Macy’s that were transferred to subsidiaries of Macy’s Propco Holdings, LLC, a newly created direct, wholly-owned subsidiary of Macy’s and (ii) a pledge by Propco of the equity interests in its subsidiaries that own such transferred real property. The notes are, jointly and severally, unconditionally guaranteed on a secured basis by Propco and its subsidiaries and unconditionally guaranteed on an unsecured basis by Macy’s Retail Holdings, LLC., a direct, wholly owned subsidiary of Macy’s, Inc.
In addition, the company closed on a new US$ 3.15 billion asset-based credit agreement. The asset-based credit agreement will mature in May 2024 and includes a short-term facility of US$ 300 million that will mature in December 2020. The asset-based credit agreement also contains an accordion feature that will enable the company to request increases in the size of the facility up to an additional aggregate principal amount of US$ 750 million. The new asset-based credit agreement is secured by all assets and common equity of the newly formed Macy’s Inventory Funding LLC, which has purchased the vast majority of the company’s inventory, and which is the borrower under the new asset-based credit agreement.
In conjunction with these financing activities, the company has substantially amended its existing US$ 1.5 billion unsecured revolving credit agreement to reduce the available credit commitment and modify the agreement’s covenants. The amended revolving credit agreement provides the company with unsecured revolving credit of up to US$ 75 million.
The company was advised on these transactions by Lazard, Kirkland & Ellis and Jones Day. Additionally, Eastdil Secured served as the company’s real estate advisor.
Credit Suisse and JP Morgan served as joint physical book runners on the company’s senior secured notes issuance. Bank of America and Goldman Sachs served as book runners on the notes issuance.
Bank of America is serving as the Administrative Agent and Lead Arranger on the company’s asset-based credit agreement.
This news release shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.