Belk entered the RSA with Sycamore Partners (its majority owner) and holders of more than 75% of its first lien term loan debt and holders of 100% of its second lien term loan debt. The RSA plans to recapitalize the business, reduce debt by approximately $450 million and extend maturities on all term loans to July 2025.
Pursuant to the RSA, members of an ad hoc crossover lender group led by KKR Credit and Blackstone Credit and other participating lenders will acquire a minority ownership in Belk.
Under the RSA, suppliers will be unimpaired and will continue to be paid in the ordinary course for all goods and services provided to the company. Belk plans to continue normal operations throughout its financial restructuring process.
The infusion of new capital is expected to support Belk’s continued investment in strategic initiatives, including delivering an omnichannel shopping experience and expanding Belk’s product offerings in home goods, outdoor and wellness.
“Belk has a 130-year legacy of providing quality products at great prices,” Lisa Harper, CEO of Belk, said. “Like all retailers navigating COVID-19, our priority has been the safety of our associates, customers and communities. As the ongoing effects of the pandemic have continued, we’ve been assessing potential options to protect our future. We’re confident that this agreement puts us on the right long-term path toward significantly reducing our debt and providing us with greater financial flexibility to meet our obligations and to continue investing in our business, including further enhancements and additions to Belk’s omnichannel capabilities.”
Belk expects to complete the financial restructuring transaction through an expedited pre-packaged reorganization under Chapter 11 of the U.S. Bankruptcy Code. The company expects the transaction to be completed by the end of February.
Kirkland & Ellis is serving as legal adviser, Lazard is serving as financial adviser and Alvarez & Marsal North America is serving as restructuring adviser to Belk. Latham & Watkins is serving as legal advisor to Sycamore Partners. Willkie Farr & Gallagher is serving as legal advisor and PJT Partners is serving as financial advisor to the ad hoc crossover lender group and O’Melveny & Myers is serving as legal advisor and Evercore is serving as financial advisor to the ad hoc first lien lender group.