Shares of Macy’s surged nearly 15 percent in after-hours trading on Monday following news the retailer has secured roughly $4.5 billion of new financing, including $1.3 billion of 8.375 percent senior secured notes and a new $3.15 billion asset-based credit agreement.
In addition, the company said it has “amended and substantially reduced the credit commitments of its existing $1.5 billion unsecured credit agreement.”
The company intends to use the financing to help pay off outstanding borrowings under the $1.5 billion credit agreement as well as address business needs related to funding operations, the purchase of new inventory for upcoming merchandise seasons, resolving accrued payable obligations, and repaying debt maturities in fiscal 2020 and 2021.
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“We are pleased with the strong demand from new investors in our notes issuance, which allowed us to tighten pricing and increase the size of the offering,” Macy’s chairman and CEO Jeff Gennette said in a statement.”The high quality of our real estate portfolio positioned us well to execute this offering.”
Gennette added that the financing gives “sufficient flexibility and liquidity to navigate our current environment and fund our business for the foreseeable future.”
Jeff Gennette, chairman and chief executive officer of Macys Inc. stands for a photograph at the NRF Foundation annual Honors Jan. 12, 2020, in New York. (Bess Adler/Bloomberg via Getty Images)
The notes will mature in June 2025 while the asset-based credit agreement will mature in May 2024. The agreement includes a short-term facility of $300 million that will mature in December 2020 and allows the company to request increases in the size of the facility of up to an additional $750 million.
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The news comes as the coronavirus pandemic has shuttered Macy’s stores across the country. The retailer reported a first-quarter loss of $905 million to $1.1 billion, with net sales falling as much as 45 percent between $3 billion and $3.03 billion.
A New York Police Department officer stands watch outside a Macy’s store, Monday, June 1, 2020, in New York. (AP Photo/Frank Franklin II)
Macy’s iconic store on 34th Street in New York City was also a victim of looting last week amid growing civil unrest sparked by the death of George Floyd.
Macy’s stock closed at $9.55 per share at the end of Monday’s trading session, up more than 8 percent.
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