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, Bloomberg News. 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.
The pandemic has hit few mall operators harder than Pyramid Management Group, a family-run owner of 14 U.S. shopping centers worth $4 billion before lockdowns hammered property values, Bloomberg News reported. Reappraisals — triggered last year amid the firm’s mounting mortgage delinquencies — slashed valuations on eight of Pyramid’s malls by 59% on average, leaving those centers worth less than their debt. Even with that burden, Chief Executive Officer Stephen J. Congel is optimistic his company can withstand the crisis that has pushed other mall owners to file for bankruptcy. “I’m paying a $50 bounty for somebody who can come up with a more dramatic word than ‘apocalyptic,’” Congel said in an interview. “We don’t believe that to be the long-term forecast for the viability of the industry.” Malls were losing market share to e-commerce and discount retailers long before the pandemic. Now, as tenants withhold rents and shutter stores, only about half of the country’s 1,100 enclosed regional centers are likely to survive, according to Floris van Dijkum, an analyst with Compass Point Research & Trading. The delinquency rate on regional mall commercial mortgage-backed securities was 22.9% in February, the highest of any real estate category, according to Moody’s Investor Service. Even the strongest landlords — Simon Property Group Inc. and Brookfield Asset Management Inc. — have talked about walking away from some of their shopping centers rather than throwing good money after bad.
Restaurant and hotel bookings are up. Airplane tickets are selling fast. Consumers spent more on gyms, salons and spas in recent weeks than they have since the coronavirus pandemic began. The U.S. economic recovery is picking up steam as Americans increase their spending, particularly on in-person services that were battered by the coronavirus pandemic, the Wall Street Journal reported. The rising number of COVID-19 vaccinations, falling business restrictions, ample household savings and injections of federal stimulus funds into the economy are fueling the surge, economists say. Economists surveyed by The Wall Street Journal this month raised their average forecast for 2021 economic growth to 5.95%, measured from the fourth quarter of last year to the same period this year, from a 4.87% projection in February’s survey. The higher figure would mark the fastest such pace in nearly four decades.
AMC Entertainment Holdings Inc. plans to have nearly all of its U.S. theaters open by Friday, marking a symbolic milestone for a chain that skirted bankruptcy during the depths of the pandemic, Bloomberg News reported. The last remaining theaters it has left to reopen are mostly in Southern California, where a surge in cases prevented health officials from recommending cinemas resume work. With those screens coming back, 98% of AMC’s U.S. theaters will be operating by March 19, with 99% online by the following week, AMC said in a statement yesterday. The reopening comes after the cinema chain’s toughest year ever, in which AMC repeatedly came close to filing for chapter 11 and saw most major new films delayed because of the pandemic. The Leawood, Kansas-based company lost $4.6 billion in 2020. It came up with a rescue package early in the year that allowed it to survive for most of 2021, even if the business doesn’t improve. “It was exactly one year ago that we closed all AMC locations in the United States,” Chief Executive Officer Adam Aron said in the statement. With the focus now on reopening, AMC is “operating with the highest devotion to the health and safety,” he said. All 23 locations of AMC’s locations in Los Angeles County, the largest moviegoing market in the U.S., will be operational by Friday. And all but two of its 54 California locations will reopened by March 22. Reopened theaters will still have capacity restrictions to allow customers to social distance. In both New York and Los Angeles, officials have said auditoriums can only be 25% full, while the theater has implemented other changes like requiring visitors to wear masks.
Visa Inc. and Mastercard Inc. are postponing planned credit-card fee increases that were set to kick in this year after the plans drew criticism from lawmakers. Citing the continuing effects of the coronavirus pandemic on businesses, Visa and Mastercard said they will hold off on increasing interchange fees for merchants until next April, the Wall Street Journal reported. Visa and Mastercard plans included raising interchange fees for many online purchases by around 0.05 to 0.10 of a percentage point, according to a document reviewed by the Journal. Those changes would have resulted in hundreds of millions of dollars in additional interchange fee charges for merchants within the span of a year, according to estimates from CMSPI, a merchants’ payments consulting firm. The planned fee increases prompted Sen. Richard Durbin (D-Ill.) and Rep. Peter Welch (D-Vt.) to send a letter this month to the chief executive officers of Visa and Mastercard calling on the companies to refrain from moving forward with the increases, citing the pandemic’s effect on businesses.
New York-based brand acquisition and management firm WHP Global said yesterday that it had taken a controlling interest in Toys ‘R’ Us parent, Tru Kids Inc., more than three years after the toy retailer filed for bankruptcy, Reuters reported. Tru Kids, owned by investment funds including Solus Alternative Asset Management, had taken charge of assets including Toys ‘R’ Us and Babies ‘R’ Us in early 2019, as part of a plan to revive the brands after the retailer’s bankruptcy. WHP said that it would manage the global TRU business going ahead for an undisclosed amount. The deal comes at a time when toymakers, including Hasbro Inc. and Mattel Inc., have been seeing a sales boom as people staying indoors buy games.
Cicis pizza buffet announced that it has successfully emerged from chapter 11 protection, FoxBusiness.com reported. The company has reorganized its corporate team, company operations and financial structure alongside an acquisition by D&G Investors. Cicis confirmed that it had entered into an agreement to sell itself to D&G Investors in early February. The growing popularity of food delivery has been a problem for Cici’s, especially since the COVID-19 pandemic has forced many diners across the country to stay home. The chain has relied primarily on an in-person, all-you-can-eat buffet model, the company said in a court filing, according to the report. Before the COVID-19 pandemic, dine-in customers accounted for 86% of Cici’s business.
The trustee overseeing Ruby’s Diner Inc.’s chapter 7 proceedings is suing the chain’s co-founders and former officers in Santa Ana, alleging the pair drove the restaurant group into bankruptcy after improperly taking the company’s assets and seeking at least $35 million in damages, MyNewsLA.com reported. The complaint, filed on Thursday in federal bankruptcy court by trustee Richard Marshack, alleges the chain’s insolvency was caused by Douglas Cavanaugh and Ralph Kosmides due to a series of improper decisions. According to the suit, RDI owned and operated the Ruby’s Diner restaurant chain, which Cavanaugh and Kosmides started in Newport Beach in 1982 and grew to include over 40 locations. The company declared bankruptcy in 2018 when it owed over $14 million to its creditors, the suit says. The lawsuit alleges RDI’s insolvency was due to a series of decisions by which Cavanaugh and Kosmides improperly enriched themselves at the expense of the company. Marshack claims that the co-founders used Ruby’s name, expertise, funds and personnel to obtain a lucrative opportunity from the state of California to develop two highly successful restaurants in Crystal Cove State Park: The Beachcomber and The Shake Shack.
Dalian Wanda Group Co., the conglomerate founded by Chinese billionaire Wang Jianlin, has given up its majority control over AMC Entertainment Holdings Inc. after the world’s largest cinema chain reported a record loss of $4.6 billion for 2020 amid repeated warnings of insolvency, Bloomberg News reported. Wanda, which bought AMC in 2012 for $2.6 billion, cut its stake and voting power in the company to 9.8% as of March 3, AMC said in its annual report. The group continues to be AMC’s largest shareholder, the cinema chain’s Chief Executive Officer Adam Aron said in an earnings call. As of October, Wanda had held 37.7% of the Leawood, Kansas-based company and 64.5% of its voting power. Wanda’s dwindling holdings in AMC marks further contraction of the group’s operations outside of China after it sold its last overseas real estate project in Chicago last year. The company, spanning malls, films, sports and theme parks, was among Chinese conglomerates that accumulated some of the world’s largest debts after paying top prices for overseas trophy assets. The conglomerate has been slimming down aggressively since 2017 to pare debt. “With no controlling shareholder in place, now, AMC will be governed, just as most other publicly traded companies, with a wide array of shareholders,” Aron said during the call.
