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Financial Markets Interconnected
May 5, 2008
It's amazing how interconnected the financial markets are. Linens ‘N Things was on the hook to GE for a
$15 Million payment that was due April 15th! Linens defaulted and filed for Chapter 11 bankruptcy, which means creditors are frozen in place allowing time for Linens to reorganize without lawsuit impediments. At the time of the filing,
A GE spokesman confirmed that its Commercial Finance unit is the lead agent on a $700-million revolving credit facility to Linens 'n Things, but declined to comment further.
Friday, May 2nd “
Linens 'n Things Inc. won interim court permission to borrow $700 million from General Electric Capital Corp. as it launches an effort to reorganize under bankruptcy protection… which will be used to pay off $430 million in existing bank loans.” That leaves Linens 'N Things “weighed down with more than $1 billion in debt, including $650 million in bond debt as well as the pre- Chapter 11 bank loans.”
The problems at
Linens "raise questions about other retailers taken private in buyouts in recent years. They include Toys "R" Us and upmarket chain, Neiman Marcus."
Apollo Global Management bought Linens in a LBO and has filed a prospectus to go public "and is negotiating (with a couple of other firms) to buy $US12 billion of leveraged debt from Citigroup," which would help Citigroup.
Like
Sun Capital "some of Apollo's other buyouts are said to be finding it tough, including real estate group, Realogy, the parent of the real estate companies Coldwell Banker and Century 21, and another chain, Claire's Stores, a jewelry, cosmetic and accessories chain catering for young women."
And last week there were developments in the factoring business with GE Capital announcing they were pulling back from providing that kind of financing to the furniture industry. See
Credit worries on rise in industry for a discussion of the implications.
Thoughts? Email them to
landfair3554@comcast.net
Posted by Mike Landfair on May 5, 2008 | Comments (0)
