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Saks Global Prepares DIP for Potential Chapter 11 Filing

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Reporting: Patrick Fitzgerald, Gaurav Sharma, Harvard Zhang

Privately held Saks Global is preparing a DIP financing in advance of a potential chapter 11 bankruptcy filing as the luxury department store chain contends with ongoing performance and liquidity woes, according to sources. Saks has more than $100 million of interest payments due on Dec. 30.

No final decision has been made about a chapter 11 filing, the sources said. The company is in discussions with multiple parties and exploring various options, one of the sources said.

Saks is working with Willkie Farr as legal advisor, according to sources. The majority of creditors are working with Paul Weiss as counsel, and minority creditors are advised by Glenn Agre, the sources said.

In mid-October, Octus reported that Saks Global lowered its full-year adjusted EBITDA guidance to a range of $140 million to $160 million, down sharply from its prior projection of $275 million to $325 million.

On the October call with investors, the company said that it has also engaged in discussions to sell a minority stake in Bergdorf Goodman, which the company acquired as part of its 2024 acquisition of Neiman Marcus Group.

For the fiscal second quarter, Saks reported that adjusted EBITDA loss widened to $77 million from a $44 million loss year over year as revenue dropped 13.1% to $1.6 billion over the same period. The company told investors that the third quarter will be similar to the second quarter, as inventory issues persist. The company had $1.9 billion worth of inventory on its balance sheet.

Saks executed a non-pro-rata liability management exercise in August that included $600 million of new money and a discounted debt swap. Kirkland & Ellis and PJT Partners advised the company on the transaction.

S&P Global Ratings downgraded the luxury retailer to SD from CC in August after the company raised $600 million of new money. The credit ratings agency viewed the debt restructuring as tantamount to a default.

An estimate of the company’s pro forma capital structure is shown below:

Saks’ SPV 11% notes due December 2029 last traded in size at 48.25 today, according to TRACE. The bid price for those notes since August is below:

Saks Global, Willkie Farr, Paul Weiss and Glenn Agre did not respond to requests for comment.

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