Macy's continues to search for cash Retailer needs quick injection of money to avoid bankruptcy.

January 14, 1992|By New York Daily News

NEW YORK WLB — NEW YORK -- R.H. Macy & Co. is continuing its search for cash as Wall Street speculates that the struggling retailer must sell assets or an equity stake quickly to stave off a bankruptcy filing.

The beleaguered 133-year-old retailer owes about $3.7 billion to its bankers, bondholders, suppliers and other creditors. Macy's lost $155 million for the quarter ending Nov. 2, and Christmas sales were lackluster.

The company must make several interest and debt payments over the next few months.

"The betting on Seventh Avenue is 50-50 Macy's will fall into bankruptcy," says Alan Millstein, editor of Fashion Network Report, a monthly trade newsletter in New York.

But, Millstein says, Macy Chairman Edward Finkelstein "has proven to be very nimble when it comes to pulling investor rabbits out of his hat."

Macy's spokesman Michael Freitag says: "Management has a game plan with multiple aspects to it . . . It would be inappropriate" to comment.

Freitag said yesterday Macy's is working with investment bankers at Goldman Sachs. He denied that the company was close to bankruptcy.

Millstein says the sale of Macy's South -- a string of 26 stores (most in Georgia) with estimated annual sales of $800 million -- could yield the best results.

"The economy in the Southeast is healthier, and Macy's would have a better shot at getting a premium," he says.

Millstein estimates such a sale could raise $300 million to $400 million.

But other analysts, including Dillon Read's Evan Mann, says the sale of the upscale I. Magnin chain makes the most sense because the store does not fit into the Macy's mold. Mann says I. Magnin could be worth $120 million to $140 million, but Millstein thinks it's worth less than that.

Both Mann and Millstein expect the retailer will seek an equity investor.

Mann thinks Macy's will start with the investors that pumped in money last year, including New York's Loews Corp. and an Asian investor, Sir Run Run Shaw.

Millstein says both asset sales and an equity investor "are necessary to restore Macy's reputation with its suppliers."

Standard & Poor's credit-rating agency responded to the news yesterday by downgrading Macy's bonds, saying the retailer had jeopardized its relationships with suppliers.

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