Belk department store
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According to a report from the Wall Street Journal, KKR, Blackstone and other major Belk lenders are in talks with the North Carolina department store chain to avoid bankruptcy.
The company, its lenders and private equity firm Sycamore Partners are getting closer to reaching an out-of-court deal, the report said, citing people familiar with the discussions.
Representatives for Belk, KKR and Blackstone did not immediately respond to CNBC’s requests for comment. Sycamore declined to comment.
A deal isn’t guaranteed at this point, the Journal report warned, but it said Belk’s lenders have noted that the Chapter 11 bankruptcy process proved difficult for a number of other retail chains during the Covid pandemic, forcing some to liquidate.
KKR and Blackstone hope to convert some of Belk’s $ 2.6 billion debt into equity, possibly through an out-of-court deal that will allow Sycamore to retain an ownership stake, the Journal said. KKR is “reluctant” to put Belk through a bankruptcy lawsuit due to the high costs associated with filing, the report said.
Department store operators in America – including Belk and its nearly 300 stores, mostly in the Southeast – have struggled as consumers visit shopping malls less often and buy less clothes during the pandemic.
Last year, Neiman Marcus, JC Penney, Stage Stores and Lord & Taylor filed for bankruptcy. The latter, the oldest department store chain in the country, eventually liquidated and closed all of its stores. Penney narrowly escaped the same outcome after American mall owners Simon Property Group and Brookfield Property Partners acquired it.
Sycamore recently purchased women’s clothing brands Ann Taylor, Loft and Lane Bryant from Ascena Retail Group bankruptcy. The private equity firm also owns Staples, which last week made an unsolicited takeover bid for Office Depot’s parent company ODP.