NEW YORK — Campeau Corp., the troubled Canadian owner of the largest collection of department stores in the United States, on Friday proposed a major overhaul that would include selling off its crown jewel, the Manhattan-based Bloomingdale's chain.
Campeau, which has struggled with tremendous debts since its $6.6-billion acquisition of Federated Department Stores last year, said a management group led by Bloomingdale's Chairman Marvin S. Traub is putting together a buyout offer. The company noted that in the past there have been many expressions of interest in the glamorous chain, whose 17 stores from New York to Texas had sales of $1.19 billion last year.
The restructuring, Campeau said, may involve a $250-million loan from its important minority shareholder, the Olympia & York commercial real estate firm. Olympia & York would hold just under 25% of the voting stock if it converted all of its debt securities to common stock; the chairman, Robert Campeau, controls 50% of the voting shares.
Convertible Loan Sought
The money would come in the form of a convertible secured loan, which means it could be turned in for stock in the Toronto-based Campeau. The proceeds would be used to pay debts that come due Thursday for its two big retail companies, the Federated and Allied Stores chains. The restructuring plan will be taken up by Campeau's board at a meeting on Tuesday, the company said.
Spokeswoman Carol Sanger said the restructuring should not be interpreted as a sign of worsening financial trouble "because it is designed to forestall trouble." She said the restructuring would also create "an active new management role" for the Reichmann family, owners of Olympia & York.
Sanger would not say how large Olympia & York's stake in Bloomingdale's would become if the company converted all of the debt into stock.
On the Toronto Stock Exchange, Campeau's stock slid Friday by $2.75 ($3.25 Canadian) to $15.90 ($18.75 Canadian) as investors worried about the company's financial health.
Several analysts expressed surprise that the company would elect to give up Bloomingdale's, recalling that Robert Campeau has often said the store was a central reason that he battled R. H. Macy & Co. for Federated.
"This is a jewel of a company, the part Campeau always said he wanted," said Walter Loeb, analyst with Morgan Stanley & Co. in New York. "If he's selling it, this is a fire sale."
Loeb said he expected to see wide interest in the sale, perhaps including bids from Japanese retailers. Loeb said it would make "good sense" for Traub to buy the company since he has been so central to its operations. Loeb said Bloomingdale's could fetch $1.2 billion, and speculated that Campeau might decide to seek other department stores in the restructuring.
Campeau said it decided to sell Bloomingdale's because as a "highly valued franchise" its sale offered the best chance of sharply reducing Campeau's debt in a single transaction. Bloomingdale's has the least in common with the company's other big chains and would be best able to function independently, the company said.
5,000 Jobs Lost
Campeau's battle for Federated, which included Bloomingdale's, rocked the retail industry, and about 5,000 jobs have been eliminated as Campeau has sought to cut his $8-billion debt. As part of the Federated deal, Campeau sold the company's Bullock's, Bullocks Wilshire and I. Magnin chains to R. H. Macy & Co., its rival in the bidding for Federated.
Campeau's 240 other department stores include those of Abraham & Straus, based in Brooklyn; the Bon Marche in Seattle; Jordan Marsh in Boston, and Burdine's in Miami. None of the company's department stores are in California, although Campeau owns the 137-store Ralphs grocery chain.
In the New York retail community, there was speculation Friday that Traub might be joined in his bid by Estee Lauder, the cosmetics company that has long done business with Bloomingdale's, and by Ralph Lauren, the fashion designer who got his big break at Bloomingdale's. Traub was unavailable for comment.
Announcement of the sale came three days after the leading trade publication Women's Wear Daily carried a long and flattering profile of Traub. In one section, the article said: "Robert Campeau and his bankers may hold pieces of paper indicating ownership, but Bloomingdale's belongs to Traub."