Nordstrom family struggles to keep company buyout deal together

Banks are wary they can’t sell debt before holiday sales season

TRD New York /
Oct.October 06, 2017 11:30 AM

The Nordstrom family is scurrying to come up with more equity to take the retailer private as it struggles to raise financing for what could be a $10 billion leveraged buyout.

The family had originally planned to put up its 31 percent stake in the company, which as of Aug. 1 was valued at $2.5 billion, and private-equity firm Leonard Green & Partners was to contribute another $1 billion in equity, the Wall Street Journal reported.

But the banks that would fill out the rest by selling about $6.5 billion in debt are concerned that they won’t be able to do so before the all-important holiday shopping season and would have to hold it until next year, the Journal reported. That would leave the banks exposed to further stress in Nordstrom’s business or the broader retail market.

The partners are now trying to come up with more equity for the deal, or could try to find buyers who would take the unsecured debt at interest rates lower than the double-digit figures banks have said they would guarantee.

A highly leveraged buyout could spell trouble down the line. Toys ‘R’ Us filed for chapter 11 bankruptcy protection last month as it was hampered by $5 billion in debt from a 2005 leveraged buyout.

If you layer debt onto a company when growth is already constrained it can further impair the company’s ability to effectively compete,” said Barbara Miller, a stock portfolio manager at Federated Investors Inc.

Nordstrom’s planned store at Gary Barnett’s Central Park Tower would likely not be affected if the company goes private. The retailer has already invested at least $249 million in the project. [WSJ]Rich Bockmann

Related Articles

John Legere (Credit: Getty Images)

WeWork reportedly in talks to hire T-Mobile exec as CEO

(Credit: iStock)

Small Talk: Every community meeting. About every development project. Ever.

An example of roll-off waste management (Credit: YouTube, iStock)

A win for big building owners in trash-collection fight

Duke Long and Poshtel International CEO Morten Lund

“I can talk about erections all day”: NAR tech consultant’s bizarre fireside chat

Council member Vanessa Gibson (Credit: New York City Council)

Commercial landlords face new fines as City Council passes anti-harassment bill

From left: Pavel Fuks, Michael Cohen, Felix Sater, and Donald Trump (Credit: Getty Images and Wikipedia)

As House begins impeachment inquiry, here’s what we know about Trump’s Ukraine-real estate ties

Rodrigo Niño (Credit: Prodigy Network and iStock)

Embattled Prodigy Network CEO Rodrigo Niño to step down

The Watchtower building at 25 Columbia Heights, CIM Group’s Shaul Kuba (right) and LIVWRK’s Asher Abehsera (Credit: Wikipedia, CIM Group, and LinkedIn)

JPMorgan leads $335M refi for CIM and LIVWRK’s Watchtower renovation