Saks scores $600M lifeline to dismay of some bondholders: report

Struggling luxury retailer Saks secured a $600 million cash boost from a group of its bondholders in a deal that could leave other lenders with losses and fewer rights if the company goes under, according to a report.

The two-part deal stipulates that the first $300 million will be given right away by investors who hold just over half of Saks’ $2.2 billion in high-interest bonds, which were issued in December.

That money will be first in line to be repaid if Saks files for bankruptcy, according to Bloomberg News.

The other $300 million will come from a bond swap offered to remaining creditors.

Those who join the deal will exchange their current bonds for new ones with the same 11% interest rate and a 2029 due date, but backed by weaker collateral.

Creditors who reject the deal will be pushed to the bottom of the repayment list and lose key legal protections, Bloomberg reported.

Last month, The Post reported that Saks bondholders were concerned about legal language in their contracts that raised doubts as to whether their investments were secured by the company’s flagship Fifth Avenue store in Manhattan.

The uncertainty has prompted some investors to push for amendments to clarify their collateral rights.

“Today’s announcement reflects the outcome of productive engagement with our bondholders and their continued confidence in our business and strategic direction,” Marc Metrick, CEO of Saks Global Operating Group, said in a statement issued on Friday.

“This comprehensive financing package meaningfully enhances our liquidity and strengthens our balance sheet.”

According to Metrick, the company is “primed to execute on our transformation strategy, invest in key growth initiatives and reinforce our leadership as the world’s largest multi-brand luxury retailer.”

The arrangement reflects a growing trend in which distressed companies strike side deals with preferred creditors — often sparking internal battles among lenders.

The Saks deal has already created a sharp divide, Bloomberg News reported.

The bonds involved in the swap were initially sold at full value to fund Saks’ $2.7 billion acquisition of rival department store chain Neiman Marcus.

But investor confidence has cratered in the months since, with the debt now trading for less than 35 cents on the dollar following reports of the proposed restructuring.

The deal replaces an earlier financing commitment secured in May that has now been scrapped. The newly issued debt will carry the same steep 11% coupon as the original bonds but include slightly stronger restrictions to prevent further reshuffling of repayment priority.

Saks Global, which now oversees Saks Fifth Avenue, Bergdorf Goodman and Neiman Marcus, has struggled to find its footing after the merger.

For fiscal 2024, the company reported a 10% decline in revenue to $7.3 billion and logged a $102 million adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss.

Nearly half of that loss came from Neiman Marcus in just the first six weeks after the acquisition closed.

Concerns have also mounted over Saks’ strained relationships with suppliers. As of mid-2025, the company owed roughly $275 million in overdue payments to vendors.

In an attempt to restore trust, Saks rolled out a repayment plan aimed at clearing those balances by mid-2026, but some brands have scaled back or cut ties altogether.

On the liquidity front, Saks currently has about $700 million in cash reserves, a figure that includes a previous $350 million financing arrangement.

Still, it is unclear how the company will be able to meet ongoing obligations in light of declining consumer demand in the luxury retail sector.