Mudrick Capital Management LP asked Neiman Marcus Group’s independent directors on Tuesday to explore a combination with rival department store chain Saks Fifth Avenue, challenging the company’s plan to reorganise under bankruptcy protection.
Neiman Marcus has negotiated a plan with most of its creditors to cancel about $4 billion of debt in exchange for handing control of the company to senior lenders led by Pacific Investment Management Corp, Sixth Street Partners and Davidson Kempner Capital Management.
The lenders hold the lion’s share of Neiman Marcus’s senior debt, giving them significant sway over whether the company’s reorganisation plan is approved. Their agreement would likely be needed before Neiman Marcus attempted to explore a sale in lieu of the current plan.
Mudrick’s letter said other creditors are hamstrung in agitating for a sale given they have signed a so-called restructuring support agreement associated with Neiman Marcus’s bankruptcy case. The company’s executives could be concerned about losing their jobs in a merger, and Neiman Marcus’s private equity owners are keen to move on from their failed investment, the letter said.
