Macy's

Company Description

R.H. Macy and Company, Inc. (“Macy’s” or the “Company”) is a large domestic department store business located across the United States. The Company is one of the most recognized department store retailers in the U.S. At the time of the transaction, the Company operated over 140 stores across 18 states.

Situation Overview

In January 1992, Macy’s filed for protection under Chapter 11 of the United States Bankruptcy Code. During the early 1990s, the retail industry in the U.S. was experiencing an excess supply of stores from over-expansion in the late 1980s, coupled with decreased consumer demand due to the 1990-1992 recession. During such time, Macy’s was experiencing serious operating difficulties and was saddled with over $5 billion in liabilities stemming largely from a 1986 leveraged buy-out.

Transaction Summary

Blackstone was retained as Macy’s financial advisor. The first critical mission was to stabilize the operations and develop a business plan. The second major effort was to develop and negotiate a plan of reorganization. Blackstone became an instrumental part of both processes, working closely with all levels of management.

In January 1995, Federated Department Stores Inc. announced the purchase of Macy’s largest senior claim and its intention to merge with Macy’s. Blackstone served as Macy’s merger advisor and, along with senior management, was responsible for raising the final acquisition price by more than $500 million from the original offer.