Neiman Marcus Talks With Debt Holders End in Stalemate

(Bloomberg) -- Initial talks between Neiman Marcus Group Inc. and its debt holders are at a standstill over the fate of one of its most promising assets, MyTheresa, according to people familiar with the matter.

The retailer and some of its creditors failed to agree on the early reworking of Neiman’s $4.7 billion debt load, the people said, asking not to be identified discussing a private matter. The company plans to release details of the competing proposals in a filing as soon as Friday, according to the people.

The luxury department store chain, which has a $2.8 billion loan due in two years, has been in discussions with an ad hoc lender group and separate bondholder group to overhaul its capital structure. Both creditor groups have been vying for a piece of Neiman’s online fashion business MyTheresa, which it moved out of creditors’ reach last quarter, said the people.

A spokesman for Dallas, Texas-based Neiman said the company has “ample runway to refinance debt with no near-term maturities.”

Sticking Point

MyTheresa, which sells high-brand products from names such as Chloe and Prada, has been a sticking point in negotiations since the asset transfer in September, said the people. Though the company continues to assert its debt documents allowed the move, some creditors argue it amounts to a default.

In one of the proposals to Neiman, bondholders asked for MyTheresa assets in exchange for new notes. In another, lenders asked for MyTheresa assets as collateral backing an exchange into a new loan with a higher interest rate, the people said.

Neiman plans to re-start talks with creditors later, and considers this period of deliberations to be the first step in the negotiation process, according to one of the people.

Neiman’s creditors are operating under non-disclosure agreements that will end once details of the competing proposals are released, the people said. Some creditors refused to sign the accord so they could continue freely trading their positions, according to the people.

The Wall Street Journal reported earlier Thursday that the talks ended without a deal.

Ad Hoc Groups

Neiman is working with law firm Kirkland & Ellis LLP and investment bank Lazard Ltd. An ad hoc group of first-lien bank loans and bonds is working with Wachtell Lipton Rosen & Katz and Ducera Partners LLC while a separate group of majority bondholders is working with Paul Weiss Rifkind Wharton & Garrison LLP and Houlihan Lokey Inc.

Representatives for the various advisers hired by the company and its creditors declined to comment or didn’t respond to messages.

Neiman is scheduled to release its fiscal first-quarter results on Dec. 6.

To contact the reporter on this story: Katherine Doherty in New York at kdoherty23@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, ;Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Sally Bakewell

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