Byline: Sidney Rutberg

NEW YORK — Saks Holdings Inc., parent of Saks Fifth Avenue, has resumed talks with Isetan Co. Ltd. on making a joint bid for Barneys New York, according to a source close to the situation.
The source also suggested that the talks are in advanced stages and said an offer could come within a month.
Apparently, Isetan has grown more intent on grabbing Barneys now that it’s won a $197 million judgment against the Pressmans, giving the Japanese company more bargaining power. Saks and Isetan create a formidable force, with Isetan now holding a very strong position against the Pressmans.
Saks, while it does have significant debt, is aggressively expanding and showing strong sales gains. It also has a management structure in the U.S. that could operate Barneys. A Saks bid could be made through shares of Saks stock, while Isetan, according to sources, would continue as a landlord of Barneys U.S. flagships rather than making further investments in Barneys.
As reported, Isetan last month won a judgment against Gene and Robert Pressman, co-chairmen of Barneys, holding them liable on personal guarantees on $167 million in advances by Isetan to a Barneys real estate subsidiary, plus $30 million in interest. The money was needed because of cost overruns in constructing Barneys flagship stores.
Last summer, Saks and Isetan had signed an agreement to jointly explore the possibility of making an offer for Barneys. However, that agreement expired in September, with Isetan and Barneys caught up in legal proceedings, and bickering surrounding the bankruptcy.
On Feb. 28, Dickson Concepts made a $240 million offer for Barneys that was quickly rejected by Barneys’ creditors’ committee as too low. There’s been no other bidding action, and since its first offer, Dickson has apparently been marking time, awaiting other bids.
“Everybody has been laying back,” said another source.
Meanwhile, creditors are reportedly getting antsy and seeking to get the bidding rolling through an auction process. But Barneys has the exclusive right to file a plan of reorganization to May 5. Creditors could oppose a Barneys extension of that right.
A Saks-Isetan bid would obviously have to top the Dickson offer and must address the rent issue. Isetan, as the landlord of the three Barneys flagships — in Beverly Hills, Chicago and on Madison Avenue — had been charging Barneys $25 million in annual rent. After Barneys filed Chapter 11 bankruptcy in January 1996, the rent was cut in half in September 1996.
Isetan defeated a bid by Barneys to invalidate the leases on its flagships through a summary proceeding without trial. The bankruptcy judge, however, found that the issue requires a full-scale trial, which is set to begin mid-April, and that in the meantime, Isetan could continue to collect some rent on the three locations.
The September agreement between Barneys and Isetan, permitting Barneys to make a monthly payment of $750,000, expired Monday, when the parties were in court again on the rent issue. They agreed to wait until April 10 for a hearing to determine how much Barneys will have to pay, as well as the rate at which rent will continue to accrue.
Saks stock closed Monday on the New York Stock Exchange at 28 3/4, down 3 3/8 in a sharply declining market.
Besides Saks and Dickson, another possible bidder is the Neiman Marcus Group, which has stated its interest in Barneys but has declared it will not get into a bidding war over Barneys.

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