Neiman Marcus secures DIP financing approval
Dallas, Texas-based department store retailer Neiman Marcus Group announced on Tuesday that it is moving into the next phase of its bankruptcy proceedings, securing approval from the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, for a $675 million debtor-in-possession (DIP) financing package.
The package includes the immediate availability of $250 million, as well as an additional $150 million as needed after September 4, 2020. Previously, Neiman Marcus had already received interim approval for $275 million when Chapter 11 proceedings began at the start of May, 2020.
“With the approval from the court to fully access the significant DIP financing we have secured from our creditors, we are well positioned to continue to serve our customers and global luxury brand partners,” said Neiman Marcus CEO and chairman Geoffroy van Raemdonck in a release.
“This financing provides us with ample liquidity to ensure business continuity as we gradually reopen our stores, invest in Fall inventory, and fund the expansion of our digital offerings as we continue our journey to become the preeminent luxury customer platform. Importantly, we remain on track to emerge from this process in Fall 2020,” he added.
Neiman Marcus filed for bankruptcy early in May, after the coronavirus pandemic pushed it to temporarily close all of its stores in mid-March.
At the time, the company entered into a binding restructuring agreement with holders representing over two-thirds of its outstanding debt. The retailer’s post-emergence capital structure is expected to eliminate approximately $4 billion in existing debt, with no near-term maturities.
Beginning earlier this month, Neiman Marcus started reopening its brick-and-mortar locations for curbside pick-up and private appointments, and has now opened 90% of its store fleet to some extent.
According to the company, sales have been stronger than expected during the reopening process. However, the retailer’s revenues are still far below pre-Covid-19 levels and the fact that its stores have been closed during the first months of its bankruptcy has meant that it experienced “negative cash flow” of around $300 million.
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