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Macy's Bond Prices Decline


Prices of R. H. Macy & Co. Inc. junk bonds fell sharply Thursday after a securities analyst said the company might have to file for bankruptcy court protection after the disappointing holiday sales season for the troubled old-line retailer.

However, Macy's, the subject of periodic bankruptcy rumors for nearly two years, again denied the suggestion that it would not be able to repay its loans or vendors on time and that it would seek protection from the federal bankruptcy laws, as two other major retailers did in the opening months of each of the last two years.

"Macy's has not filed and has no plans to file for Chapter 11," a company spokesman said. "Rumors like this have circulated for quite a while and have not been true, and that will continue to be the case."

Meredith Adler, an analyst with First Boston Corp., had said Macy's faces problems on several fronts:

* Suppliers losing confidence because of the sluggish retailing environment.

* The company's potential lack of sufficient cash to meet all its debt repayments in 1992.

After Adler's comments, Macy's junk bonds dropped between $5 and $6 per $100 in face amount in volatile trading Thursday. The company's stock is privately held.

The retailer, still burdened by debt of more than $3 billion from its 1986 leveraged buyout and subsequent acquisitions, faces a $26.9-million payment to bondholders on April 15 and more than $75 million in other loan payments in the following months. If Macy does not make the April 15 payment, bondholders could force the company into bankruptcy court, she warned.

And even if bond repayment terms are changed, she noted, "they leave themselves open to (disgruntled bondholders) putting them into bankruptcy."

Several analysts say the continuing sluggish retail scene left Macy's so short of cash last month that it was forced to renegotiate the terms of its revolving credit agreement that finances the company's daily operations.

Macy has been the subject of negative rumors ever since it suffered a disappointing Christmas in 1989. It has suffered from the same malaise as many other retailers as consumers, worried about the economy or short of cash, cut back their spending on non-essentials.

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