Belk Inc. has entered into a debt restructuring agreement with its majority owner, Sycamore Partners.
Under the restructuring support agreement announced Tuesday, Sycamore, a private equity firm based in New York, will retain majority control of the Charlotte-based department store, according to a news release from Belk. Members of an ad hoc crossover lender group led by global investment firms KKR Credit and Blackstone Credit will acquire a minority ownership in the company.
The transaction, to be completed through an expedited reorganization under Chapter 11 of the U.S. Bankruptcy Code, is expected to be finalized by the end of February, according to the release.
The plan will reduce debt by approximately $450 million and extend maturities on all term loans to July 2025, according to the release. Belk has received $225 million in financing commitments from Sycamore, along with KKR Credit and Blackstone Credit as well as first lien term lenders.
Current suppliers will continue to be paid “in the ordinary course for all goods and services provided to the company,” which plans to continue normal operations throughout the restructuring process, according to the release.
Belk, which opened its first store in 1888, has nearly 300 stores in 16 Southeastern states. In December 2020, it announced plans to invest $2.5 million in improvements to its Blythewood distribution center.
“Belk has a 130-year legacy of providing quality products at great prices,” Belk CEO Lisa Harper 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.”
Kirkland & Ellis LLP is serving as legal adviser, Lazard is serving as financial adviser, and Alvarez & Marsal North America LLC is serving as restructuring adviser to Belk. Latham & Watkins LLP is serving as legal advisor to Sycamore Partners.
Willkie Farr & Gallagher LLP is serving as legal advisor and PJT Partners LP is serving as financial advisor to the ad hoc crossover lender group, while O'Melveny & Myers LLP is serving as legal advisor and Evercore is serving as financial advisor to the ad hoc first lien lender group.