Please ensure Javascript is enabled for purposes of website accessibility

Macy's Reportedly Issuing Up To $5 Billion in Debt to Survive Shutdown

By James Brumley - Apr 22, 2020 at 9:04AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The latest intimation echoes headlines that have surfaced over the past several days.

Beleaguered department store name Macy's (M -1.91%) may be seeking as much as $5 billion in new debt-based financing, according to a report from CNBC Tuesday evening.

CNBC did not name its sources other than to describe them as "people familiar with the matter." But the development would align with other recent headlines regarding the retailer. Late last week Bloomberg also reported the company was considering leveraging real estate assets as collateral for new bonds that would raise much-needed money. Earlier last week, Reuters reported Macy's has been working with investment bank Lazard, although the news agency did not indicate exactly what the bank may have been hired to do.

Wooden cubes spelling the word 'debt' on top of $100 bills.

Image source: Getty Images.

Like most retailers, Macy's stores are currently shuttered in an effort to curb the spread of COVID-19. To remain afloat while no sales are being made, in March the company tapped into $1.5 billion worth of credit. With no clarity as to when the coronavirus-inspired lockdowns may be lifted, however, that amount may still not be enough.

Although the department store chain has access to a trove of real estate which could be sold or pledged as collateral, property doesn't appear as if it will be the primary basis of any new debt. The report indicated inventory could be collateralized for up to $3 billion in funding, while real estate may only be leveraged to raise up to $2 billion in cash.

Macy's did not comment directly on the matter, but a spokesperson did acknowledge to CNBC that the company is "exploring numerous options to strengthen our capital structure."

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Macy's, Inc. Stock Quote
Macy's, Inc.
M
$17.97 (-1.91%) $0.35

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.