Burkle buys big chunk of struggling retail chain Barneys' debt
20 Nov 2009
Supermarket mogul Ron Burkle and his investment arm Yucaipa have purchased a large part of US luxury retail chain Barneys New York's debt, according to reports.
Citigroup Inc sold a big part of Barneys' secured term loan to Burkle at about 60 cents on the dollar. Yucaipa also bought a big part of Barneys' subordinated debt, says the report that first appeared in the Wall Street Journal on Friday.
Barneys, which is owned by Dubai's Istithmar World Capital, hired restructuring advisory firm Perella Weinberg earlier this year to help shore up its financial position. The luxury chain, with stores in cities like New York and Chicago, has struggled in the recession.
Istithmar, a unit of Dubai World, bought Barneys for $942 million from Jones Apparel Group in 2007. It provided some additional funding to the chain in April, allowing it to pay for its shipments for the rest of the year.
Burkle has bought a large part of the company's secured term loan from Citigroup Inc at about 60 cents on the dollar, the WSJ report says. Burkle, through his investment fund, also bought a chunk of Barneys' subordinated debt.
The investment could make Burkle a pivotal player in the future of Barneys, a 42-store high-fashion chain whose cachet has attracted a rotating cast of corporate owners.
Barneys took on debts of about $500 million to fund the purchase. Since then, economic woes have crimped Barneys' sales, and it has been without a chief executive for the past 18 months.
Hedge-fund manager Richard Perry is expected to be the key player in any negotiations as his hedge fund holds a controlling position in Barneys' senior debt.