This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Ares and Canada Pension Plan Ring Up Neiman Marcus

Neiman Marcus leases most of its store locations, while Saks' real estate is worth about $1.5 billion, including its flagship Fifth Avenue location.

In Neiman Marcus' 2005 leveraged buyout of the Dallas-based retailer, TPG and Warburg contributed $1.23 billion out of a total of $1.47 billion in equity to help finance the buyout. The actual purchase price was closer to $4.7 billion, as the retailer's $400 million to $500 million in cash on its balance sheet was used to help finance the transaction. The remaining $3.2 billion was financed with long-term debt.

The private equity backers also collected a $443 million dividend on March 30, 2012, for a total return of about $3.7 billion, or about 2.5 times the initial total equity investment of $1.47 billion.

Neiman Marcus consists of 79 stores, including 41 Neiman Marcus stores, two Bergdorf Goodman locations on Fifth Avenue and 36 Last Call outlet stores. It operates e-commerce under the Neiman Marcus, Bergdorf Goodman, Last Call and Horchow brand names.

Ares' previous retail investments include Floor & Decor, General Nutrition Centers, House of Blues, Maidenform Brands, Samsonite, Serta, Simmons, Smart & Final and 99¢ Only Stores.

In its June IPO filing, Neiman Marcus said its sales increased from $3.9 billion to $4.5 billion over the last three years, while operating earnings jumped from $317 million to $428 million and adjusted EBITDA bumped up from $527 million to $623 million over the same period.

The department store chain generated cash flow of $233 million by the time of the S-1 filing in June 2013. For fiscal year 2012, the company had $260 million in cash flow as compared to $272 million in fiscal 2011.That cash flow, the company said, has been used to pay off debt and dividends totaling $1.2 billion since October 2005.

Neiman Marcus had about $2.7 billion in long-term debt as of April 27 and about $69 million in cash.

Credit Suisse Group acted as financial adviser to Neiman Marcus, with Cleary Gottlieb Steen & Hamilton giving legal counsel.

RBC Capital Markets and a Deutsche Bank Securities team consisting of Kent Penwell, Keith Wargo, James Lange and Stephen Schlosser provided Ares and CPPIB with financial advice. The financial advisers also provided committed debt financing for the deal. A Proskauer Rose team led by Michael Woronoff acted as transaction counsel and Latham & Watkins served as legal adviser to Ares and CPPIB. Torys provided legal advice to CPPIB.

Written by Richard Collings.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
SKS $0.00 0.00%
AAPL $112.07 -0.24%
FB $89.16 -0.81%
GOOG $614.11 -0.04%
TSLA $250.26 1.00%

Markets

Chart of I:DJI
DOW 16,507.92 +156.54 0.96%
S&P 500 1,974.07 +25.21 1.29%
NASDAQ 4,798.0960 +48.1170 1.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs