Neiman Taps Junk-Bond Market to Refinance Bankruptcy Exit Debt

Neiman Marcus Holding Company Inc. launched a junk-bond sale on Thursday to refinance debt taken out to emerge from bankruptcy, marking the retailer’s return to the capital markets just six months after exiting from Chapter 11.

The troubled upscale department store is marketing a $1 billion five-year first lien bond. An investor call is scheduled for 11 a.m. New York time, with pricing expected on Friday.

Proceeds will pay down the $125 million first-in, last-out facility and repay the roughly $748 million exit term loan and notes due 2025, resulting in a “modest” reduction in interest expenses, according to a report Thursday morning by S&P Global Ratings.

Early pricing discussions are for a yield in the mid-to-high 7% range.

S&P rated the new notes and company CCC+, seven steps into junk. “We continue to view Neiman’s capital structure as unsustainable based on our expectation for pressured performance through fiscal 2021,” the S&P analysts wrote.

The Covid-19 pandemic shut down Neiman’s stores and caused an already precarious financial situation to tip it into bankruptcy. The Dallas-based company emerged from Chapter 11 in September under control of creditors Pacific Investment Management Co., Davidson Kempner Capital Management and Sixth Street Partners.

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