NEW YORK — In a surprise move, the bondholders’ committee of R.H. Macy & Co. on Thursday filed its own plan of reorganization with Cyrus R. Vance, the court-appointed mediator in the chain’s Chapter 11 case. The plan would give bondholders the opportunity to buy 100 percent of the stock in a reorganized Macy’s.
Earlier in the day, Vance authorized the filing of plans by Macy’s, Federated Department Stores and the bondholders.
The bondholders propose that they be given rights to buy 91.3 percent of the stock in the reorganized company with a cash investment of $1.47 billion. In addition, the bondholders would be given the other 8.7 percent of Macy’s equity in settlement of their $1.3 billion in claims.
The bondholders would get an assignment of claims Macy’s may have against General Electric Capital Corp. GECC is a secured creditor of Macy as well as a shareholder, and it operates Macy’s lucrative credit card business.
According to market sources, the bondholders are saying to Macy’s that if it believes the company is worth only $1.9 billion in post-Chapter 11 equity, it should sell it to them. Under their plan, they would get a 15 percent discount for paying cash, according to these sources.
In a statement, the bondholders said that if the rights were fully exercised, the $1.47 billion in cash would equal 85 percent of the equity value allocated to all non-bondholder creditors in the Macy plan.
The bondholder plan values Macy’s at $3.24 billion, compared with $3.67 billion in the Macy plan and $3.51 billion in the plan filed by Federated.
The bondholders’ plan would give some secured creditors $1.6 billion in Macy debt and others cash instead of common stock they would have received under the Macy revised proposal. This assumes the rights offering is fully subscribed.
The plan does not disclose where the $1.47 billion to exercise the rights offering is coming from and Robert M. Miller, attorney for the bondholders’ committee, could not be reached for comment.
Specifically, the bondholders propose paying off the Prudential/Federated claim with $10.6 million in cash and $1.05 million in secured debt. The working capital bank group’s $735.5 million claim would be paid in full in cash with interest if the rights are fully exercised.
General unsecured creditors, whose claims are estimated at $426.3 million, would get $66.3 million in cash, five-year warrants to buy 0.5 percent of the common stock, 8 million shares if no rights are exercised and $68 million in cash if all rights are exercised.