Putnam Investments has placed a large, concentrated bet that struggling U.S. shopping malls can transform themselves even as key tenants shut stores or file for bankruptcy, Reuters reported. So far, it is winning - to the chagrin of hedge funds like Alder Hill Management LP that are on the other side of the bet. Putnam, a Boston-based mutual fund firm, holds more than $1 billion worth of derivatives tied to mortgages on shopping malls, office buildings and hotels, according to interviews and filings analyzed by Reuters.
A Neiman Marcus Group Ltd. bondholder said the luxury retailer is in default on its debt after transferring online business MyTheresa to its parent company, further from the reach of creditors, WSJ Pro Bankruptcy reported. Distressed-debt investor Marble Ridge Capital LP said on Friday that it sent a letter to Neiman Marcus “expressing concern” about the transaction. The retailer said on Tuesday that it transferred shares of MyTheresa, an online business that caters to younger customers in Europe, the Middle East and Asia, to its parent holding company, Neiman Marcus Group Inc. Marble Ridge said the transfer is an improper “dividend” to Ares Management LP and the Canada Pension Plan Investment Board, the owners of the parent company.
Steinhoff International Holdings NV is assessing ways to attract extra funding for Mattress Firm to execute a turnaround of the troubled U.S. bedding retailer, Bloomberg News reported. Bought for $3.8 billion two years ago, Mattress Firm has emerged as a headache for Steinhoff as it strives to shore up liquidity following an accounting scandal. The 3,300-store chain expanded too aggressively, suffered from ineffective marketing and has been embroiled in a dispute with suppliers, Steinhoff said in a presentation to creditors in London yesterday. Steinhoff bought Mattress Firm toward the end of an acquisition spree that preceded the uncovering of accounting irregularities in December, which wiped almost 95 percent off the share price. The South African company secured an agreement with lenders over the restructuring of almost 10 billion euros ($11.7 billion) of debt in July, buying it time to stabilize an empire that also includes Conforama in France and Pepkor Europe. Mattress Firm needs “incremental liquidity” for its recovery to be secured, and management, led by Chief Executive Officer Steve Stagner, is considering ways to access capital, Steinhoff said.
In any barroom debate over the most successful restaurant in the Roanoke Valley, Va., it’s a sure bet Mac and Bob’s in Salem would make many of the short lists. Launched in 1980 with 10 stools in a rented cubbyhole on East Main Street, the restaurant now seats 330 and still has occasional lines to get in. It’s not at all a stretch to call it a Salem institution, The Roanoke Times reported. That growth has occurred in an industry in which most independent operators do not last five years. Now, owners Bob Rotanz and Joe Dishaw are in a jam they never anticipated. They gathered scores of employees together and announced the restaurant is filing for chapter 11. Mac and Bob’s will remain open, but how did they get here? It’s a bizarre story that involves servers and dishwashers, shared tips and federal wage-and-hour laws. The saga also includes a Texas lawyer and a lawsuit filed by a server who quit in April. Mac and Bob’s inadvertently violated the law by requiring its servers to share a small portion of their tips with dishwashers, a policy that stretches back at least 20 years. Until recently, Rotanz had no idea that practice was illegal. The dishwashers were already earning at least $9 per hour before those tips. The policy required servers to share 1 percent of their nightly sales with the dishwashers. While it is legal for restaurants to require tip-sharing between servers and other dining-room employees, federal law prohibits sharing tips with kitchen staff unless the restaurant pays servers at least $7.25 per hour, the federal minimum wage.
An examiner will be appointed in the case of Samuels Jewelers Inc., the string of stores owned by Mehul Choksi, one of the men sought by Indian authorities in connection with an alleged $2 billion bank fraud, WSJ Pro Bankruptcy reported. Judge Kevin Carey ordered the appointment of an examiner yesterday, after a brief debate in the U.S. Bankruptcy Court in Wilmington, Del., where Samuels filed for chapter 11 on Aug. 7, its business battered by fallout from the allegations of fraud brought against it by one of India’s largest banks. Punjab National Bank, a state-owned financial institution, says it was defrauded by Choksi, who owns Samuels, and by his nephew Nirav Modi, owner of Firestar Diamonds Inc. and other jewelry concerns.
A major Applebee’s franchisee, which recently closed 13 locations as part of its bankruptcy reorganization, is planning another round of shutdowns, with at least six more locations expected to go out of business by month’s end, WSJ Pro Bankruptcy. RMH Franchise Holdings Inc., the second-biggest franchisee of Applebee’s restaurants, also says it “will likely need to close certain additional restaurant locations” beyond those six depending on the outcome of lease negotiations. After closing the six restaurants, RMH will own about 140 Applebee’s locations, all in the U.S. RMH revealed the latest closures in a filing yesterday in the U.S. Bankruptcy Court in Wilmington, Del., seeking permission to make severance payments to workers losing their jobs. RMH and related companies sought protection from creditors in early May through a chapter 11 petition. The Atlanta-based company later that month asked for the court’s permission to make severance payments to workers affected by the first round of closures.
Luxury retailer Neiman Marcus Group Ltd. has transferred shares of its MyTheresa online subsidiary to its parent holding company, a move that pressured the company’s bonds yesterday, WSJ Pro Bankruptcy reported. Before the transfer of MyTheresa to the parent company, Neiman Marcus Group Inc., there was some anticipation that the retailer would use the MyTheresa shares to entice bondholders to swap their debt for bonds with a longer maturity. “Some bondholders may have incorrectly assumed that the company would embark on a distressed debt exchange involving MyTheresa shares as collateral,” said Steven Ruggiero, an analyst at Pressprich & Co. The company has $4.7 billion in debt.
Solus Alternative Asset Management LP didn’t kill Toys “R” Us Inc., the hedge fund said in a letter to its investors after coming under pressure for its investments in the liquidating retailer, Bloomberg News reported. “Solus did not force Toys ‘R’ Us to liquidate,” Chief Investment Officer Christopher Pucillo said in the Sept. 6 letter seen by Bloomberg News. “It was the culmination of a host of factors, including a decade-plus of excessive leverage, mismanagement and the increasing effects of competition from the likes of Amazon and Walmart.” The two-page letter lays out a timeline and narrative to rebut allegations that the refusal of Solus and other creditors to compromise on their investments forced the company to wind down when it could have lived on through a sale. New York-based Solus invested $20 million in a Toys “R” Us loan before its bankruptcy and added stakes in its senior debt after the chapter 1u1 filing, according to the letter. As the company closes its operations, Solus has attracted criticism from worker groups who say they deserve hardship pay after losing their jobs and that Solus and other lenders share the blame for the company’s failure to restructure.
Staffing up for the year-end crush is an annual challenge for retailers. But with unemployment at record lows, this year is shaping up to be an exceptional task, the Wall Street Journal reported. There were 757,000 retail job openings across the country in July, about 100,000 more than the same time a year ago. The number of openings surpassed the number of hires from March through June for the first time in a decade, according to the Bureau of Labor Statistics. And some big cities, including New York, San Francisco and Seattle, are facing a shortage of workers with retail skills, according to data from LinkedIn. Retailers are responding by starting the push for holiday workers earlier than ever, raising wages and offering extra perks such as profit-sharing and paid time off for part-time associates. They are also hosting recruiting marathons with the goal of hiring thousands of workers in a single day.
