To help pay back borrowings under its existing $1.5 billion credit facility, Macy’s Inc. unveiled the offering of $1.1 billion in senior secured notes set to mature in 2025. The department store retailer said the notes would be secured by a selection of real estate assets, with the inclusion of three landmark properties, according to a statement.
Macy’s said it also foresees entering into an asset-based credit facility in conjunction with the bond offering. It noted in the statement, “Upon the completion of the bond offering, as well as our entry into the credit facility, we expect to have more than sufficient liquidity to fund our operations and retire upcoming debt maturities in fiscal 2020 and fiscal 2021.”
The retailer forecasts roughly $3 billion of revolving credit commitments upon closing of the credit facility, with the inclusion of a $300 million revolving bridge credit facility that will mature at the conclusion of the current calendar year. According to the statement, “The credit facility will be backed by the majority of our owned inventory and will mature in 2024.”
The news comes as Macy’s cautioned on May 21 that it foresees a first-quarter operating loss of as much as $1.11 billon but noted that it was “on track” to access more financing that could presumably help the chain steer clear of bankruptcy.
Macy’s Chairman and Chief Executive Officer Jeff Gennette said in warning of the loss, “This is a challenging time for the country, for retail and for Macy’s, Inc. COVID-19 has impacted the lives of many of our colleagues and customers, and health and safety remain our top priority.”
He said the retailer foresees operating red ink in the range of $905 million to $1.11 billion for Q1 in comparison to operating income of $203 million a year prior. The retailer also forecasts that net sales will drop to a range of $3 billion to $3.03 billion for the timeframe.