Belk department store
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KKR, Blackstone and other lenders in Belk are in talks with the North Carolina-based department store chain to keep it out of bankruptcy, according to a Wall Street Journal report.
The company, its lenders and private equity firm Sycamore Partners are nearing an out-of-court settlement, according to the report, which cites people familiar with the discussions.
Representatives from Belk, KKR and Blackstone did not immediately respond to CNBC’s requests for comment. Sycamore declined to comment.
A deal is not guaranteed at this time, the magazine’s report warned, but Belk’s lenders noted how the Chapter 11 bankruptcy process has proved difficult for several other retail chains during the Covid pandemic, and some have been forced to settle.
KKR and Blackstone hope to convert a portion of Belk’s $ 2.6 billion debt into equity, possibly through an out-of-court settlement that will allow Sycamore to hold a shareholding, the newspaper said. KKR is “reluctant” to bring Belk to bankruptcy proceedings because of the high fees associated with filing, according to the report.
U.S. department store operators, including Belk and its nearly 300 stores, mostly in the southeast, have had problems with consumers frequenting malls less often and buying fewer clothes during the pandemic.
Last year, Neiman Marcus, JC Penney, Stage Stores and Lord & Taylor filed for bankruptcy. The latter, the oldest department store chain in the country, ended up liquidating and closing all its stores. Penney escaped the same result after U.S. mall owners Simon Property Group and Brookfield Property Partners acquired it.
Sycamore recently bought women’s clothing brands Ann Taylor, Loft and Lane Bryant for bankruptcy from Ascena Retail Group. The privately held firm also owns Staples, which last week made an unsolicited takeover bid for Office Depot’s main OPP.