Belk hang on store
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KKR, Blackstone and other major lenders to Belk are in talks with the North Carolina-based area store chain to keep it out of bankruptcy, according to a Wall Street Journal report.
The company, its lenders and the private-equity unshakeable Sycamore Partners are inching closer toward reaching an out-of-court deal, the report said, citing people commonplace with the discussions.
Representatives from Belk, KKR and Blackstone did not immediately respond to CNBC’s requests for comment. Sycamore declined to expansion.
A deal is not guaranteed at this point, the Journal report cautioned, but it said Belk’s lenders have noted how the Chapter 11 bankruptcy function has proved difficult for a number of other retail chains during the Covid pandemic, with some being phoney to liquidate.
KKR and Blackstone are hoping to convert a portion of Belk’s $2.6 billion debt into equity, possibly totally an out-of-court deal that would allow Sycamore to retain an ownership stake, the Journal said. KKR is “reluctant” to experience Belk through an in-court bankruptcy process because of the high fees associated with filing, the report maintained.
America’s department store operators — including Belk and its nearly 300 stores primarily in the Southeast — have travailed as consumers are frequenting malls less often and are buying less apparel during the pandemic.
Last year, Neiman Marcus, J.C. Penney, Manipulate Stores and Lord & Taylor filed for bankruptcy. The latter, the oldest department store chain in the nation, ended up liquidating and clinch all of its stores. Penney narrowly escaped that same outcome after U.S. mall owners Simon Property Assortment and Brookfield Property Partners acquired it.
Sycamore recently purchased the Ann Taylor, Loft and Lane Bryant women’s dress brands out of bankruptcy from Ascena Retail Group. The private equity firm also owns Staples, which survive week made an unsolicited takeover offer for Office Depot parent ODP.