Macy's Raises $4.5B In Funding To Navigate Post-Pandemic Reopenings

Macy’s Inc. M announced on Monday that it had raised a total of $4.5 billion in new financing round, which includes the previously announced $1.3 billion in 8.375% in senior secured notes, as well as $3.15 billion in borrowings against its real estate assets.

What Happened

Macy’s CEO Jeff Gennette said in a statement that the company possessed the required flexibility and liquidity to steer the “current environment and fund our business for the foreseeable future.”

Gennette stated, “The high quality of our real estate portfolio positioned us well to execute this offering.” He noted that there was a “strong demand” among investors for Macy’s notes, which allowed the company to “tighten” pricing and increase the offering’s size.

Why It Matters

According to Macy’s, it would be able to purchase new inventory as stores reopen and also service its upcoming debt payments in FY 20 and 21. 

The retailer, which also owns Bloomingdale's, will use the proceeds from the offering and its existing cash stockpile to repay borrowing under its existing $1.5 billion unsecured revolving credit agreement.

Macy’s revealed that it had amended the terms of the credit agreement to lessen the available commitment and modify the agreement’s covenants. 

The amended agreement will give Macy’s access to revolving credit of up to $75 million.

The coronavirus pandemic has hit retailers hard due to store shutdowns. Rival Gap Inc.’s GPS stacked up to $1 billion leading it to carry out a review of its real estate portfolio.

Price Action

Macy’s shares traded 14.55% higher at $10.94 in the after-hours session on Monday. The shares had closed the regular session 8.89% higher at $9.55.

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