BARNEYS:Barneys gets new owner in debt-for-equity deal
NEW YORK (Reuters) - Barneys New York Inc has struck a deal with Perry Capital, its largest lender, that will erase most of the luxury chain's debt and turn the hedge fund into its majority owner.
Under a debt-for-equity swap with Perry Capital, as well as other lenders, Ron Burkle's Yucaipa Cos and current owner Istithmar World, the chain's long-term debt will fall to $50 million from $590 million, Barneys said on Monday.
Barney Chief Executive Mark Lee said in a statement that the deal frees up cash for revitalizing its stores and improving its e-commerce site.
Jones Group Inc
The upscale chain's sales swooned during the financial crisis of 2008-09, when well-heeled shoppers pulled back on luxury spending. But like Saks Inc
In 2011, comparable sales rose by a double-digit percentage, Barneys said.
Barneys, which operates nine department stores, including a flagship on Manhattan's Madison Avenue and a chain of less expensive co-op stores, said in February it had hired a restructuring firm to help it with debts coming due this year.
The following day, on February 9, Standard & Poor's lowered Barneys' credit rating to 'CC' from 'CCC,' saying its debt level was "unsustainable."
(Reporting By Phil Wahba in New York)