Neiman Marcus Group’s proposal to take more time to pay back its debt is tantamount to a deal with the devil, according to one hedge fund, Bloomberg News reported. The Dallas-based retailer said last week that it had reached a preliminary agreement with a majority of its bondholders and lenders giving it three additional years to pay them back and allowing the struggling retailer more time to turn itself around. As part of that agreement, the company would swap current borrowings for new obligations. That exchange will end up helping some investors that made side bets against the company in the credit derivatives market, according to a letter from Dan Kamensky, founder of hedge fund Marble Ridge Capital. The investment firm is a Neiman Marcus bondholder that is suing the retailer over a subsidiary that it transferred. “This seemingly innocuous provision is a spectacular ‘Devil’s Bargain,’ presumably struck by the company at the behest of the sponsors to create a massive windfall for a subset of creditors betting against the company,” Kamensky wrote, referring to Ares Management LP and Canada Pension Plan Investment Board, the investors that own the retailer.
