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Macy and Its Suitors Sweeten Their Offers : Retailing: But the company claims it has the support of most creditors for its plan to emerge from bankruptcy.

May 10, 1994|GEORGE WHITE | TIMES STAFF WRITER

R.H. Macy & Co., rival Federated Department Stores Inc. and a group of Macy bondholders on Monday each sweetened their debt payment offers for Macy's bankruptcy reorganization, but Macy said it has the support of a majority of its creditors.

Cincinnati-based Federated revised a bankruptcy plan that proposes a merger with Macy--offering to pay Macy's creditors $3.83 billion, about $318 million more than it offered in a bid last month. Macy's creditors--the lenders and vendors that must approve a bankruptcy reorganization plan--could force a merger by opting for the Federated plan.

However, Macy revised a bid it made in March by offering an additional $260 million in stock purchase rights to unsecured creditors--the bondholders and product suppliers that do not have pledges of collateral from the retailer. Under that new offer, Macy would be paying $3.93 billion of its total debt of $6 billion--$100 million more than Federated.

Macy and Federated announced their revised terms shortly after the close of stock trading Monday.

A third plan was submitted by Macy's bondholders. The bondholders have expressed dissatisfaction with the Macy and Federated proposals, contending that they would not receive adequate compensation.

The bondholders offered secured creditors the same terms contained in a proposal submitted last week but gave them the option of taking an additional $1.6 billion in cash instead of debt securities. In total, creditors would receive about $3.25 billion.

Under their proposal, the bondholders would give up their $1.3 billion in claims in return for complete ownership of Macy.

Another possible player in the reorganization scramble--Nomura Securities International Inc.--had expressed interest in submitting a reorganization plan, but court-appointed mediator Cyrus R. Vance did not authorize such a bid Monday. Industry analysts said a Nomura proposal will not be considered in the negotiation process.

Representatives from Nomura met with Vance and some Macy bondholders last week. Nomura, a Japanese company with North American operations based in New York, indicated it could help pay creditors by issuing bonds that would be backed by Macy's real estate.

Macy said it still expects to emerge from bankruptcy in January, 1995, three years after it entered Chapter 11 proceedings. Sources at Macy said they have the support of most of the major secured creditors--among them Fidelity Investments, Swiss Bank Mortgages and Citibank.

"We have worked diligently and successfully with all of our creditor groups in developing and enhancing the revised (proposal), which we firmly believe will result in a confirmable plan of reorganization," Macy Chairman Myron Ullman said. "The creditors' strong support reflects their endorsement of Macy's future and confidence in its potential value."

Officially, Macy--operator of the Bullock's, I. Magnin and Macy's chains--must get court approval for its reorganization plan. Vance will meet with creditors this week to discuss the rival plans.

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