March 16 - Saks Global reported on Monday that it has accessed an additional $300 million from the lender-backed portion of its $1.75 billion bankruptcy financing package and that an ad hoc bondholder group has signed off on the retailer's five-year business strategy.
The company, which filed for Chapter 11 in January and says its entire bankruptcy financing package totals $1.75 billion, previously said it needed fresh capital to repair strained vendor relationships and to buy time to renegotiate its debt. The newly accessed tranche, the company said, completes its "pre-emergence financing package," providing what management describes as sufficient liquidity to sustain operations during restructuring.
Executives indicated that the principal elements of the bondholder-backed five-year plan - which assumes growth and profitability supported by strengthened liquidity - will be rolled into Saks Global's formal plan of reorganization. That filing is expected to be submitted to the U.S. Bankruptcy Court for the Southern District of Texas within the next several weeks, the company said on Monday.
The Chapter 11 process has coincided with a pullback from lower-priced retail formats. Since commencing the bankruptcy case, Saks Global has closed 20 of its 33 Saks Fifth Avenue retail stores. The company entered Chapter 11 carrying $3.4 billion in debt.
Saks Global also reported operational progress on inventory and vendor relations. Shipping has resumed at nearly 600 brands, which the company says has released about $1.4 billion in retail receipts back into its cash flows. Management framed these developments as steps toward stabilizing the business ahead of reorganization.
"We have made significant progress over the past two months as we work to position Saks Global for the future, quickly stabilizing our business, improving inventory flow and investing in our transformation," said Geoffroy van Raemdonck, CEO of Saks Global.
Company statements emphasize that the completed tranche of financing allows the retailer to continue operations while it finalizes its restructuring plan. The firm said the bondholder-approved plan's assumptions about growth and profitability, supported by the improved liquidity profile, will form the basis of the reorganization strategy that will be filed in the coming weeks with the bankruptcy court.
Contextual note - The company said the financing and plan approval are intended to help rebuild vendor trust and provide time to renegotiate its outstanding obligations. The precise terms of the reorganization will be disclosed when the plan is formally filed with the court.