HBC Maneuvers for Financial Flexibility
HBC is maneuvering for greater financial leeway.
On Wednesday, HBC said it extended the maturity date of its asset-based revolving credit facility to June 30, 2026, from October 2024. The credit limit for the facility is $1.1 billion. The ABL is used to finance working capital requirements and other general corporate purposes, the company indicated in its statement.
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HBC, along with Pathlight Capital, also announced that the retailer’s existing senior secured term loan has been increased by $50 million, to $443 million, providing the retailer with additional support for growth initiatives and working capital purposes. Pathlight serves as the administrative agent of the loan. The upsized term loan also matures on Sept. 30, 2026.
“We continue to support the HBC management teams’ efforts to best position the company for the future,” said Katie Hendricks, partner at Pathlight Capital.
In addition, HBC announced the closing of a new term loan facility of up to $150 million secured by certain U.S. real estate assets, providing more liquidity for the company for general working capital purposes.
“We are delighted with the strong support and partnership from Bank of America, Pathlight and our other lenders,” said Jennifer Bewley, chief financial officer of HBC, in a statement. “The incremental liquidity generated by these financings, coupled with the extended maturity date and the additional liquidity we have raised through planned real estate monetization, provides even greater financial flexibility. This transaction underscores the significant potential within each of our portfolio companies and the value of our real estate assets.”
HBC has been the subject of speculation that its business in North America has been tough and that bill paying to vendors has been delinquent in certain cases. However, Wednesday’s disclosure shows some increased confidence in the business by lenders. Last November, the company said it raised $340 million in cash that would also be used to bolster its retail operations, and a month later, Saks’ chief executive officer Marc Metrick, in a letter to vendors, wrote: “Saks, which is managed separately from the SFA Stores and under its own credit group, has sufficient liquidity and a sound balance sheet. As we carefully manage our business against the industrywide softness in the U.S. luxury market, we are confident in our ability to continue meeting our financial obligations.”
HBC has been seeking to purchase the Neiman Marcus Group but a deal is unlikely any time soon given soft business conditions in the luxury market and financing challenges.
Pathlight Capital is a private credit investment manager providing asset-based loans secured on a first or second-lien basis against tangible and intangible assets, and access to incremental liquidity for a variety of purposes.
HBC is the majority owner of Saks, the luxury e-commerce site; The Bay e-commerce marketplace in Canada, and Saks Off 5th, the upscale off-price e-commerce company.
HBC also wholly owns the Hudson’s Bay, the operating company for Hudson’s Bay’s brick-and-mortar stores, as well as SFA, which operates Saks Fifth Avenue stores, and O5, which operates the Saks Off 5th stores.
In North America, HBC owns or controls, either entirely or with joint venture partners, approximately 42 million square feet of gross leasable area. HBC Properties and Investments, the company’s real estate and investments portfolio business, manages these assets and additional real estate offerings, including Streetworks Development, its property development division.
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