Report: Saks Global working with advisors on liquidity and financing strategies

US luxury department store chain Saks Global enlisted financial and legal consultants to secure its liquidity.

As industry magazine Women's Wear Daily (WWD) reported on Monday, the company is working with financial experts from Bank of America and PJT Partners, as well as law firms Willkie Farr & Gallagher and Kirkland & Ellis.

While PJT Partners and Kirkland & Ellis are known for their expertise in restructuring and special situations, WWD stressed that Saks primarily wants to use access to the capital markets and strengthen liquidity. A direct preparation for a crisis scenario such as insolvency is not the focus.

Rather, the aim is to strengthen the balance sheet in an “efficient manner” without falling into a hectic crisis mode, according to a person familiar with the matter speaking to WWD. “There are capital reserves on the edges that can be used,” the source added. All options are currently being carefully examined.

Transformation under difficult signs

The transformation of Saks Global remains a challenging undertaking. Executive chairman Richard Baker, who, together with Bernd Beetz, took over the struggling German department store chain Galeria in summer 2024 via his investment company NRDC, is consistently pushing ahead with the company's realignment together with chief executive officer Marc Metrick. In December, Saks issued 2.2 billion dollars in bonds to finance the 2.7 billion dollars acquisition of Neiman Marcus.

According to its own information, the company currently still has liquid funds of around 400 million dollars. Saks believes it is in a position to make the 120 million dollars interest payment due in June to its bondholders on time. Nevertheless, the situation remains tense: the bonds, which were still trading at 97 percent of their nominal value at the beginning of the year, were recently only trading at around 60 percent, as WWD reports.

To further stabilise its financial situation, Saks is working on setting up a first-in, last-out (FILO) credit line of 300 million dollars. This would be based on existing collateral from the 1.8 billion dollars asset-backed loan and would not involve any additional debt. At the same time, the consultants are examining further measures, including the possible sale of parts of the approximately 3.5 billion dollars real estate portfolio, sale-and-leaseback transactions or the use of values from non-core business areas.

Editor's note: FashionUnited has asked Saks Global for a statement.