NEW YORK -- This week could prove to be pivotal in R.H. Macy & Co.'s fight to keep Federated Department Stores from swallowing it whole.
Two weeks ago, Cyrus R. Vance, the court-appointed mediator in the Macy's Chapter 11 case, convinced Federated to hold its fire until today in order to give Macy's own reorganization plan a fair hearing with creditors.
Now it's fair play for Federated to sell its own plan to creditors.
Vance has set meetings this week with Macy's creditors, including Federated.
Federated, which acquired a significant portion of Macy debt as the first move in its takeover attempt, reportedly will pitch enormous potential cost savings, in the neighborhood of $100 million in the short term by consolidating various divisions.
There has been widespread speculation that Federated's A&S division could be merged in Macy's East. In addition, there has been speculation that some I. Magnin units in California could be converted into Bloomingdale's units.
Federated will also sell its strong management, growth potential and financial stability.
Back from a 10-day personal trip to China, Vance will now find himself in the middle of challenging and heated negotiations.
Vance's meetings with creditors, sources said, will center around the Macy's term-sheet proposal on how to reorganize.
Federated has said that following Vance's meetings with Macy's creditors, the former Secretary of State would advise Federated on how best to "initiate discussions with other Macy creditors" on its proposal for Macy's.
The action might prove to be a welcome change for Vance. He's a highly skilled negotiator who since his Feb. 22 appointment as mediator has been studying Macy's Chapter 11 and is said to be ready to roll up his sleeves and get to the bargaining table.
Federated, which has Smith Barney Shearson as its investment adviser, would not comment on the timing of any meetings or when it will break out its plan for Macy's. As reported, Macy's outlined a term sheet offer that valued the retail giant at $3.6 billion, but held out to creditors the chance to collect an additional $500 million if Macy's stock went up in price.
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