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Barneys New York is sold to Ron Burkle and Perry Capital

Ron Burkle's Yucaipa Cos. and Perry Capital take ownership of luxury fashion retailer Barneys in a debt-restructuring deal.

May 08, 2012|By Stuart Pfeifer, Los Angeles Times

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

Burkle's Yucaipa Cos. and Perry Capital took ownership of Barneys in a debt-restructuring deal, Barneys announced Monday. Perry Capital is the majority owner. The deal slashes Barneys' debt to $50 million from $590 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 Mark Lee said in a statement.

Burkle originally made an offer to take a controlling stake in Barneys in 2010.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 did not go through.

Burkle will get an equity stake in the company with the current deal, which will enable Barneys to avoid bankruptcy.

Barneys, which rose from humble origins to the heights of fashion, was acquired in 2007 for nearly $1 billion by Istithmar World, the investment arm of the Dubai government. The deal involved a lot 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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