Saks Global Enterprises, a struggling luxury retailer, recently announced a significant cash infusion of $600 million from a group of its bondholders. This deal, consisting of two parts, involves investors providing $300 million upfront and the remaining $300 million through a bond swap offered to other creditors.
The first group of investors, holding over half of Saks’ $2.2 billion in high-interest bonds, will be first in line for repayment in case of bankruptcy. The second group of creditors can exchange their current bonds for new ones with the same 11% interest rate and a 2029 due date, but backed by weaker collateral. Those who reject this deal will lose key legal protections and be pushed to the bottom of the repayment list.
Saks Global’s CEO, Marc Metrick, expressed gratitude for the bondholders’ confidence in the company’s strategic direction. He emphasized that the financing package would enhance liquidity and strengthen the balance sheet, allowing Saks to focus on growth initiatives and maintain its position as a leading luxury retailer.
The restructuring deal reflects a growing trend in distressed companies forming agreements with preferred creditors, often leading to internal conflicts among lenders. The bonds involved in the swap were initially sold at full value to fund Saks’ acquisition of Neiman Marcus, but investor confidence has declined significantly since then.
Saks Global, which oversees Saks Fifth Avenue, Bergdorf Goodman, and Neiman Marcus, faced challenges following the merger. The company reported a 10% revenue decline in fiscal 2024 and a $102 million adjusted EBITDA loss, with a significant portion attributed to Neiman Marcus shortly after the acquisition.
Additionally, Saks has struggled with overdue payments to vendors, owing approximately $275 million as of mid-2025. To address this issue, the company rolled out a repayment plan to clear balances by mid-2026, but some brands have reduced or terminated their relationships with Saks.
Despite having around $700 million in cash reserves, including previous financing arrangements, Saks faces uncertainties in meeting ongoing obligations amidst decreasing consumer demand in the luxury retail sector. The company’s future viability hinges on successfully navigating these challenges and implementing effective strategies to restore financial stability.
