What happened

Shares of Macy's (M -0.22%) were down on Wednesday, after a report that the company is working on a deal to pledge assets in return for as much as $5 billion in emergency financing to weather the coronavirus pandemic.

As of 12:00 p.m. EDT, Macy's shares were down about 8.3% from Tuesday's closing price. 

A Macy's sign on the outside of a store.

Image source: Macy's.

So what

The cash-crunched retailer is looking to raise as much as $5 billion via new secured debt offerings, CNBC reported before the markets opened on Wednesday. According to the report, which cites multiple "people familiar with the situation," Macy's is seeking to use its inventory as collateral to raise $3 billion and some of its real-estate holdings as collateral for an additional $1 billion to $2 billion.

The company's iconic flagship store in New York's Herald Square will not be part of the collateral offered, CNBC said.

Macy's reportedly retained investment bank Lazard and restructuring experts at the law firm of Kirkland & Ellis earlier this month. 

Now what

Macy's was in the midst of a restructuring effort before the outbreak of the COVID-19 virus, with plans to close 125 stores over the next three years. The company has already drawn down its existing credit line, adding $1.5 billion to its balance sheet. 

But with almost $1 billion in debt coming due in the next two years and uncertainty about when (or whether) consumers will return to its physical stores, Macy's clearly needs some additional liquidity to ensure that it can avoid bankruptcy. 

As Macy's appears to be closing in on a deal to secure that liquidity, the question that retail investors are asking now is this: At what price? Stay tuned.