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Burkle adds new upscale holding: Barneys New York

May 07, 2012|By Stuart Pfeifer

Los Angeles magnate Ron Burkle went upscale with the latest addition to his portfolio: fashion retailer Barneys New York.

Burkle’s The Yucaipa Companies and Perry Capital took ownership of Barneys in a debt-restructuring deal, Barneys announced Monday. The deal slashes Barneys debt from $590 million to $50 million.

“This agreement provides us with increased free cash flow that will be used to revitalize our stores, invest in and further enhance our customer experience at a time when our operational financial performance is very strong,” Barneys chief executive officer Mark Lee said in a statement.

Burkle had originally made an offer to take a controlling stake in the company in 2010. At the time, he offered to inject $50 million into the chain in a deal that would have given him 80% of the company’s common stock. The deal never went through.

He’ll now finally get an equity stake in the company with the current deal, which will keep Barneys from declaring bankruptcy.

Barneys, which rose from humble origins to the heights of fashion, was acquired in 2007 by the investment arm of the Dubai government, Istithmar World Capital, for nearly $1 billion. The deal involved lots of debt, which has caused problems for the company.

In addition to its flagship store on Madison Avenue in New York, Barneys has stores in upscale areas across the country, including Beverly Hills..

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