Macy’s has completed a new round of financing totaling nearly $4.5 billion, which it said would be sufficient to float it through the foreseeable future.
Still in the process of reopening its store fleet, Macy’s said the financing includes $1.3 billion of 8.375 percent senior secured notes, and a new $3.15 billion asset-based credit facility. The new senior secured notes are backed by some of Macy’s real estate assets and will mature in June 2025. The asset-based financing agreement will mature in May 2024, and includes a short-term facility of $300 million that will mature in December. The agreement also includes an accordion feature that allows the retailer to request increases in the size of the facility up to an additional $750 million. It is backed by a newly formed entity called Macy’s Inventory Funding that purchased the majority of the chain’s stock and is the actual borrow under the asset-based credit agreement.
Macy’s said it plans to use the proceeds of the notes and cash on hand to repay the outstanding borrowings under an existing $1.5 billion unsecured line of credit. That existing revolver has been amended to reduce the available credit commitment with an unsecured revolving line of credit of up to $75 million.
“We are pleased with the strong demand from new investors in our notes issuance, which allowed us to tighten pricing and increase the size of the offering. The high quality of our real estate portfolio positioned us well to execute this offering. Additionally, the continued commitment from our bank group allowed us to more than double the size of our existing revolving credit facility,” Jeff Gennette, chairman and CEO, said. “Together, the notes offering and asset-based credit agreement provide Macy’s Inc. with approximately $4.5 billion of borrowings and commitments, giving us sufficient flexibility and liquidity to navigate our current environment and fund our business for the foreseeable future.”
Macy’s will provide preliminary first-quarter results on Tuesday. Earlier this year, the company unveiled its Polaris strategic plan that calls for the closure of 125 stores and reviews how its private-label brands can fuel its merchandising strategies.