NEW YORK — In a move that should quell concerns over its debt and cash positions, Saks Inc. said Monday it intends to repurchase $1.2 billion worth of debt.
The retailer also said it asked for an extension to file its annual report.
In a statement Monday, Saks Inc. said it is looking to buy back three debt notes and make an additional consent solicitation offer for three other notes. Included in the tender offer were notes for $250 million due in 2010, $208.1 million due in 2013 and $200 million due in 2019. Included in the consent solicitation are $230 million in convertible senior notes due in 2024, $141.6 million due in 2011 and $190.3 million due in 2008.
Saks said it requested an extension on filing its annual report with the Securities & Exchange Committee until Oct. 31, which would allow it to avoid defaulting on its loans under their current terms. Saks was expected to file its annual report on Sept. 1. The original filing deadline was early last week.
After the retailer missed its original deadline, which Saks had said it would, the company was hit with a default notice on the $230 million convertible debt note. An unnamed hedge fund that owns a 25 percent position on the note issued the notice of default.
A notice of default could lead debt holders to issue an "event of default," which could accelerate the payment schedule of all of Saks' debt, making the debt due immediately.
But last week, Saks said it was prepared to pay its debt load. Despite that, the notice of default led to two credit rating downgrades, one from Moody's Investors Service and the other from S&P's Ratings Service. Later in the week, Saks reiterated its ability to repay its debt.
The delay in filing its annual report, which triggered the default notice and credit downgrades, is due to an internal review of improper markdown allowances at Saks.
Shares of Saks ended Monday down 0.3 percent to $17.79.
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