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21-11-2005
  16
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fashionista-ta's Avatar
 
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Well, I don't think any of us have insider knowledge on what happened. What does seem clear is that the company is left with a bit of a black eye, with both of its major voices departed. I'm not familiar with the structure of the company, but I'm certain they have many more executives who don't have a public face, and those would be the logical necks to put on the chopping block. I have been through a Fortune 10 merger myself, and it's a Darwinian process for sure. And btw, a major executive who had "won" his slot left for a better job during the process.

It seems entirely likely to me that these two knew that changes would be coming, and preferred to author those changes themselves. OTOH, it may be that restrictions were being imposed that neither could live with.

Bottom line, I think the company is left weaker. It will be interesting to see their next move.

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21-11-2005
  17
flaunt the imperfection
 
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Quote:
Originally Posted by fashionista-ta
Very interesting ... I didn't realize Joan had retired. Last I saw of her she was being quoted about the confusion in fashion for spring ... Wonder why this news wasn't mentioned in any of Neiman's publications?

I have noticed that women seem to find it easier to leave than men do. Look at Rose Marie Bravo, Kristi Todd Whitman, Karen Hughes, etc. Women tend to understand there's more to life than work.

Looks to me like neither of these two had much confidence in what might happen with the company up on the block and decided to be proactive ...

When you have two of the most respected voices in retail working for you, you don't diss them--I think the Neiman-Marcus Group is far too smart for that. I think this was strictly free will.
agreed...


it's pretty shrewd timing for robert burke...
many retailer's are looking to hire consultants to help them get back on track right now...
i know this from personal experience...

you can always go back under the corporate umbrella later on it you want...
but consulting is a good way to make some money FAST...


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21-11-2005
  18
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regarding the neiman marcus situation...I came across an article on WSj. it's about the difficulties for the new owners to raise capital. I thought that it was a nice article telling us the business side of the story.
for your entertainment purpose~

Neiman Marcus Meets Skepticism
Long-Awaited Deal Sees
Some Resistance as Market
For Risky Debt Gets Jittery

By SIMONA COVEL and TOM SULLIVAN
DOW JONES NEWSWIRES
September 29, 2005; Page C4


High fashion met high yield yesterday as the long-awaited leveraged buyout financing for Neiman Marcus Group Inc., once thought to be a shoo-in for the hungry junk-bond market, instead met with some skepticism, as the new market for risky debt turned jittery in recent sessions.

In the face of investors' skittishness, bankers on the $5 billion-plus buyout -- Credit Suisse First Boston is the lead underwriter for the debt portion, with Goldman Sachs, Deutsche Bank and Banc of America Securities -- sharply scaled back the amount of junk bonds to $1.2 billion from $2.175 billion. The more receptive leveraged-loan market, where demand continues to outstrip supply, made up the difference: a term loan that was slated at $1 billion swelled to nearly $2 billion.

The deal included $500 million of 10-year senior subordinated notes, down from an originally planned $575 million, which were sold at par with a coupon of 10.375%. These notes are rated B3 by Moody's Investors Service, single-B-minus by Standard & Poor's and triple-C by Fitch Ratings. It also included $700 million, reduced from $750 million, of 10-year senior unsecured notes to be paid with coupons either in cash or pay-in-kind debt at the company's option. These notes were priced at par with a coupon of 9%. They are rated B2, single-B-minus and triple-C-plus by Moody's, S&P and Fitch, respectively.
A planned $850 million chunk of senior secured notes was restructured and added to the company's 7.5-year term loan, which swelled to $1.975 billion and will yield 2.5 percentage points over the London interbank offered rate. The deal also includes a $600 million revolving credit line.

"It's a nice name but the new issue market is a little uncertain," said Kathleen Gaffney, vice president and portfolio manager at Loomis Sayles in Boston, which manages more than $68.4 billion in equity and fixed-income assets. High leverage on a retailer is a concern, she said, adding that Loomis Sayles is passing on the deal.

Investors, inundated with a steady stream of new issuance and shaken by the recent hurricanes and continuing trouble in the auto sector, question the luxury retailer's prospects as the deal's sponsors pile on billions in new debt. On top of those factors, a retailer may not seem like such a wise buy as consumer confidence -- and maybe the overall economy -- suddenly appear to quiver. Still, market participants are enticed by the company's strong sales and management, which leads to a tough buying decision.
A company official declined to comment on the private offering.

When the buyout of Neiman Marcus, based in Dallas, was announced several months ago, investors predicted it would sail through -- it is a big, liquid deal and investors and analysts alike praise the company's solid management and continually strong operating performance.

But retailers are notorious for inconsistent cash flows and are vulnerable to consumer whims. And unlike some retailers, Neiman Marcus doesn't own the majority of its stores, so they can't be used to protect the deal.

Add to those nagging concerns a high-yield market that suddenly balked in general, and the deal hit a road bump. Neiman Marcus isn't alone: Several recent deals have been forced to ratchet up coupons.

"People thought there was plenty of extra cash to absorb these new deals," said Michael Difley, portfolio manager at American Century Investments, Mountain View, Calif., which has $17 billion in fixed-income assets under management. "The enthusiasm hasn't really materialized."

It seems to me that the two PE firms met some difficulties on the deal. It was also surprising to me that Neiman doesn't own most of their stores

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21-11-2005
  19
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Most interesting about the stores ... anyone know who does own the majority then??

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21-11-2005
  20
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my guess is that they don't own the properties, so they have nothing to collateralize. Normally those properties are owned by shopping center developers or real estate investors even REITs. In that case Neiman needs to pay them rent on an ongoing basis...it's basically a lot of debt already.
I wonder if Saks owns its properties...

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