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Nordstrom Family Scrambles to Save Buyout Plans

Store Officials: Despite Bankruptcy, Toys ‘R’ Us Stores to Remain Open

Bankrupt U.S. Retailers Begin to Catch a Break

Creditors Set Oct. 7 Deadline for Sears Canada to Enter Liquidation
Creditors to Sears Canada have set a deadline of Oct. 7 for the retail chain to enter liquidation agreements for all its assets, leaving the company with just days to reach a deal to continue operations, Reuters reported. That tight deadline presents a challenge and could potentially derail negotiations with the executive chairman Brandon Stranzl, who stepped away from day-to-day operations of Sears Canada to come up with a proposal to keep the 65-year-old company running. Stranzl submitted a revised proposal, lawyers for Stranzl said. Stranzl’s bid presents “significant closing risk and uncertain recovery,” FTI consulting the court-appointed monitor said in a report on its website this week. Sears Canada has steadily lost market and struggled to remain relevant to shoppers who have switched to stores that keep up with fast-changing fashion trends. Sears Canada’s sales have fallen every quarter since it was spun off from Sears Holdings in 2012. Sears must agree to liquidate all its assets by Oct. 7 to receive payments from its creditors to ease a growing liquidity crunch, according to the latest amendment to an agreement between the company and its creditors.
Nordstrom Drops on Report Its Buyout Deal Is Losing Support
Nordstrom Inc. shares fell the most in almost five months amid growing concerns about a deal to take the upscale department-store chain private, Bloomberg News reported yesterday. The Nordstrom family has struggled to amass the financing needed for the buyout. The Nordstrom family first announced it was considering a buyout in June. With the overall department-store industry slumping, a deal would give them a chance to work on a turnaround plan outside of public scrutiny. Private equity firm Leonard Green & Partners has held discussions about supplying about $1 billion in financing, but the total deal could require as much as $10 billion. Read more.
What does the future hold for retail bankruptcies? Be sure to attend ABI’s Bankruptcy 2017: Views from the Bench on October 17.

Toys ‘R’ Us Unveils Augmented Reality Plans Following Bankruptcy
Two weeks after filing for bankruptcy protection, Toys ‘R’ Us is debuting an augmented reality (AR) experience that it hopes will help reinvigorate its stores and make them destinations for shoppers who might otherwise choose to shop online, USA Today reported today. The AR activities — which plant computer generated images on top of a real world environment — tap into the interest sparked by the Pokemon Go craze last year. They will go live at 23 Toys ‘R’ Us stores today and then nationwide on Oct. 21. While the AR experience was being developed months before the company filed for chapter 11 protection to deal with $5 billion in long-term debt, efforts to make the retailer's roughly 1,600 stores more interactive will be key to the company's turnaround, says CEO Dave Brandon.

Reis: U.S. Retail Mall Vacancies Up 8.3 Percent in 3Q 2017
Real estate research firm Reis Inc. said yesterday that U.S. retail mall vacancies rose to 8.3 percent in the third quarter, compared with the preceding quarter, due to confirmed closings of J.C. Penney and Sears Holdings Corp. stores, Reuters reported. Construction activity fell 49.2 percent in the quarter, with 1.63 million square feet of new construction completed, the lowest level of completions since 2014, according to the report. The trend would likely continue as more stores announced bankruptcy or closures, including Toys ‘R’ Us, The Gap, Teavana and True Religion Jeans, the firm said. So far, 10 retailers have filed for bankruptcy in 2017, higher than last year, with the number set to eclipse 20 bankruptcies filed during the 2008 financial crisis, according to AlixPartners, which advises distressed firms. Asking rent inched up 0.4 percent, while effective rent rose 0.5 percent, Reis said. Read more.
What does the future hold for retail bankruptcies? Be sure to attend ABI’s Bankruptcy 2017: Views from the Bench on October 17.

Toys ‘R’ Us to Receive a Cheaper Rate on Bankruptcy Loan
Toys “R” Us Inc. is close to getting a cheaper rate on an operating loan that could help with the retail chain’s efforts reorganize in bankruptcy, Bloomberg News reported yesterday. While the company has a total of $3.1 billion in bankruptcy financing, including a $1.85 billion asset-backed revolver, the improved rate comes on a $450 million term loan. Initial talk for the loan, which is syndicated and fully funded, was a price of Libor plus 750 basis points, or 7.5 percentage points; now a rate of Libor plus 675 basis points is being discussed. The terms will potentially save the company around $4.4 million in interest over the lifetime of the loan, according to data compiled by Bloomberg. The terms also improved on the original-issue discount, giving Toys "R" Us 99.5 percent of the loan’s funds, rather than 99 percent. JPMorgan Chase & Co. is the lead agent on the 16-month loan, and Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc. and Barclays Plc are joint arrangers and book runners, according to court papers. Read more.
What does the future hold for retail bankruptcies? Be sure to attend ABI’s Bankruptcy 2017: Views from the Bench on October 17.
