NEW YORK — While the R.H. Macy & Co. board continues debating the company’s future, some investors are prepared to put in new money to help finance a reorganization plan, according to one of its directors.
While specific figures are not available, speculation is that the numbers being talked about are in the range of $400 million to $600 million.
The Macy board, which met on Monday, postponed voting on the retailer’s amended plan until April 28. The decision came after one of Macy’s independent directors, Harold M. Williams, sent the board a letter dated April 15 that questioned the wisdom of the board approving a plan that “substantially undervalues the Macy’s franchise.”
In his letter, Williams states, “It is my understanding that certain existing equity holders are prepared to invest additional dollars in Macy’s.”
Macy’s is scheduled to deliver the plan to court-appointed mediator Cyrus R. Vance on April 29.
Williams, president and chief executive officer of the J. Paul Getty Trust and a former chairman of the Securities and Exchange Commission, became a Macy director last year. He has no stock in the company, according to Macy’s most recent 10-K filing.
Noting that he would not be able to attend the Monday meeting, Williams said he was “troubled” by some of the issues. He said he believed the primary responsibility of the board was to get maximum value for creditors and shareholders, but that was not being done.
“Based upon developments that have occurred, it would appear to me that everything as it relates to Macy’s plan of reorganization has been prearranged and there is no opportunity to demonstrate and take into account that Macy’s enterprise value is substantially greater than the number [$3.6 billion] used in the plan.
“From my own review of the materials provided, it appears that a convincing case is made for a significantly higher value and there appears to be enough disparity between the values presented by the Blackstone Group and Price Waterhouse to strongly suggest that substantial value is not being captured for the benefit of all of Macy’s constituents, both creditors and equity.”
The Blackstone Group, hired as Macy’s financial adviser, evaluated the firm at $3.3 billion. Price Waterhouse along with Houlihan, Lokey, Howard & Zukin, an investment banking firm, were hired by the bondholders and they valued Macy’s at over $4 billion, according to a source.
Williams’ letter says, “I do not understand why management and members of the Board of Directors are prepared to accept a plan of reorganization that substantially undervalues the Macy’s franchise at the very time that the results of the equity investments and hard work of management are being realized.”
He said an undervalued plan would create a “high probability” that Federated or some other buyer could buy Macy’s at less than “fair value.”
Another board member, Louis Page of Winmex Investments Inc., representing the interests of Run Run Shaw, has stated that Shaw might put in additional money.