TITLE

Innovative Financing Wins Neiman Marcus

AUTHOR(S)
Abrams, Sandra Lea
PUB. DATE
January 2006
SOURCE
Investment Dealers' Digest;1/16/2006, Vol. 72 Issue 2, p62
SOURCE TYPE
Trade Publication
DOC. TYPE
Article
ABSTRACT
The article focuses on the deal of Neiman Marcus Group Inc. in 2005 in the U.S. The tandem of Texas Pacific Group and Warburg Pincus & Co. eventually won the deal, thanks in large part to a groundbreaking financing package spearheaded by CSFB. After winning the retailer for $5.1 billion, the deal's financing still had to clear an unsettled high-yield bond market. An innovative debt financing scheme was used which included a jumbo loan with no maintenance covenants, despite sky-high leverage, and a senior notes issue that included the first ever "toggle" feature, which allows the borrower to switch from paying cash interest to pay-in-kind interest at its discretion for the first five years of the bond's 10-year life. The deal germinated in December 2004 when financial planner Goldman Sachs & CO. advised Neiman Marcus's largest shareholder that the time was right to explore a sale.
ACCESSION #
19512073

 

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