Saks scores $600M lifeline in deal that could saddle some bondholders with losses: report

Struggling luxury retailer Saks secured a $600 million cash boost from a group of its bondholders in a deal that could leave other lenders with losses and fewer rights if the company goes under, according to a report.The two-part deal stipulates that the first $300 million will be given right away by investors who hold just over half of Saks’ $2.2 billion in high-interest bonds, which were issued in December.That money will be first in line to be repaid if Saks files for bankruptcy, according to Bloomberg News.The other $300 million will come from a bond swap offered to remaining creditors.Those who join the deal will exchange their current bonds for new ones with the same 11% interest rate and a 2029 due date, but backed by weaker collateral.Creditors who reject the deal will be pushed to the bottom of the repayment list and lose key legal protections, Bloomberg reported.Last month, The Post reported that Saks bondholders were concerned about legal language in their contracts that raised doubts as to whether their investments were secured by the company’s flagship Fifth Avenue store in Manhattan.The uncertainty has prompted some investors to push for amendments to clarify their collateral rights.“Today’s announcement reflects the outcome of productive engagement with our bondholders and their continued confidence in our business and strategic direction,” Marc Metrick, CEO of Saks Global Operating Group, said in a statement issued on Friday.“This comprehensive financing package meaningfully enhances our liquidity and strengthens our balance sheet.”According to Metrick, the company is “primed to execute on our transformation strategy, invest in key growth initiatives and reinforce our leadership as the world’s largest multi-brand luxury retailer.”The arrangement reflects a growing trend in which distressed companies strike side deals with preferred creditors — often sparking internal battles among lenders.The Saks deal has already created a sha...