Shares of Macy's (NYSE:M) are moving higher today, up about 8.1% as of 10:15 a.m., after the company announced a refinancing plan that includes a $1.1 billion secured note offering and a new $3 billion line of credit.
Macy's said that it is offering $1.1 billion in senior notes secured by some of its real estate assets, including three New York City properties, 35 mall stores, and 10 of its distribution centers. Macy's will use the proceeds of the notes, which mature in 2025, along with some of its cash on hand to pay off its current $1.5 billion line of credit.
Once its current line of credit is paid off, Macy's said, it will enter into a new $3 billion revolving credit facility that will be secured by "the majority" of its inventory.
The company had over $1.5 billion in cash on hand as of May 22, it said.
The takeaway for retail stock investors: While it had to pledge some big assets, Macy's should now have the liquidity to weather the COVID-19 crisis and proceed with its restructuring plan.
Macy's gave investors an update and a bit of forward guidance in a regulatory filing related to its debt offering. The company said it began reopening its U.S. stores on May 4 and had about 270 stores open as of May 22. So far, demand is running at about 50% of year-ago levels, which is higher than it had expected.
Macy's also said that while there's still too much uncertainty to give detailed financial guidance, it expects gross margin relative to the year-ago period to be lowest in its fiscal second quarter (which runs through Aug. 1), with sequential improvement going forward.
Macy's will report its fiscal first-quarter results on July 1.