Dive Brief:
Belk is reducing its debt load by more than $950 million, while also amassing about $485 million via new loans. Some of Belk’s lenders, including KKR and Hein Park, will have a controlling interest in the business, the department store said Tuesday.
The new financing includes $275 million in secured term loans and a $210 million securitization facility secured by revenue streams from Belk’s loyalty credit card, according to a company press release.
The transaction with Belk’s first and second lien lenders and equity sponsor Sycamore Partners also extends the maturity date of its existing asset-based credit facility by five years, per the release.
Dive Insight:
The last time Belk shed a load of debt was its one-day trip through bankruptcy three years ago. That time, the department store collected $225 million in new capital, extended maturities on its term loans to 2025 and reduced debt by about $450 million.
Back then, Belk Chief Financial Officer William Langley blamed the pandemic for the company’s financial woes, telling the bankruptcy court that the disease outbreak “has undoubtedly been the primary catalyst for Belk’s declining liquidity position and its current inability to satisfy upcoming debt service obligations.”
In a statement Tuesday, Belk CEO Don Hendricks said little about what has been pressuring the regional department store this time, but said it has seen some “momentum and growth” in recent quarters and called Tuesday’s announcement “a pivotal milestone.”
The company said the latest transaction is the result of efforts by private equity firm Sycamore “to significantly deleverage the Company’s capital structure, preserve thousands of jobs, and provide the business with additional liquidity to expand national vendor partnerships.”
Belk, which runs nearly 300 stores in 16 Southeastern states, was family-owned for almost 130 years when Sycamore acquired it in 2015 for $3 billion. Tim Belk, a member of the third generation of the founding family, retired as CEO in 2016 after 12 years; his brother, Johnny Belk, by then had already left his job as chief operating officer.
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