Reuters reports that supermarket mogul Ron Burkle and his investment company, Yucaipa, have bought up a large amount of Barney's debt. Dubai World owned Istithmar paid $942.3 million for Barney's in 2007 but the luxury retailer has been struggling since then. A Wall Street Journalarticle says Baryney's is exploring a possible restructuring.
Barneys took on debts of about $500 million to fund the purchase. Since then, economic woes have crimped Barneys' sales, and it has been without a CEO for the past 18 months.
Istithmar now is exploring a possible Barneys restructuring, with the retailer tapping investment bank Perella Weinberg Partners to advise it. One approach typically taken in such situations is to wipe out company equity, while delivering control to debtholders.
Hedge-fund manager Richard Perry is expected to be the key player in any negotiations; his hedge fund holds a controlling position in Barneys' senior debt. "There are conversations, but no process," said one person familiar with the matter, adding not to "expect anything imminent."
One analysts cited in the Wall Street Journal story doesn't think Barney's will need to restructure its debt. The retailer could pull out if the luxury market starts to recover in 2010 but there are still a lot of doubts about how well the economy is going to do in the next couple years.
Reuters 
