Innovative Financing Wins Neiman Marcus

Abrams, Sandra Lea
January 2006
Investment Dealers' Digest;1/16/2006, Vol. 72 Issue 2, p62
Trade Publication
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.


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