Nine West plans asset sale
Retailer is considering filing for bankruptcy as it deals with debts, sources say
NEW YORK— Nine West Holdings Inc. and its creditors are closing in on a deal to restructure almost $1.5 billion (U.S.) of debt that would include filing for bankruptcy and selling off parts of the shoe and clothing retailer, according to people with knowledge of the negotiations.
The plan hinges on asset sales to pay off creditors, according to the people, who asked not to be identified because the negotiations are private.
Nine West would seek Chapter 11 court protection with a restructuring plan agreed upon in advance by its creditors, the people said. The goal is to file before a March 15 interest payment, they said.
First-lien lenders would likely be repaid in full, with second-lien lenders getting the majority of the equity in the reorganized company, according to one of the people. A small portion of the equity would go to holders of the retailer’s bonds, the person said.
Nine West’s 8.25-per-cent notes due 2019 last traded Monday at 11 cents on the dollar, according to Trace bond-price reporting data.
A representative for Nine West and its private equity owner Sycamore Partners LLC declined to comment.
Chapter 11 bankruptcy allows a company to stay in business while it works out a plan to repay its creditors.
Nine West, led by interim chief executive officer Ralph Schipani, doesn’t have any debt maturing until 2019, but then it would have to refinance around $1 billion, including a term loan, an asset-based revolver and unsecured bonds.
The retailer has one of the highest leverage ratios in the industry, with debt exceeding 19 times adjusted earnings, according to Moody’s Investors Service.
Nine West has been negotiating with its creditors at least since last year, when lenders and bondholders organized with advisers.
Nine West has one of the highest leverage ratios in the industry, with debt exceeding 19 times adjusted earnings
Three groups of creditors hired their own advisers for negotiations, Bloomberg previously reported, including a group of secured lenders led by KKR & Co. and Farmstead Capital Management and a separate group of holders of both secured and unsecured term loans including Carlson Capital and CVC Credit Partners. Brigade Capital Management, also a creditor, hired its own advisers.