Following talks between lenders’ advisors, the company and the company’s advisors, Neiman Marcus lenders are now preparing to enter into restricted talks about the terms of a debt restructuring proposal that could include an amend to extend and exchange transaction, according to sources. Certain term loan and bond holders have been told they will likely get restricted as soon as this month, sources say.

The company’s proposal contemplates an amend and extend scenario for the term loan, which pushes out the maturity date with modified covenants and coupon rate, according to sources. Separately, Neiman’s proposal provides an exchange for unsecured bondholders that would likely include value in the form of an exchange into secured debt, sources add. Neiman intends to make the proposals to the various lender groups simultaneously as part of a comprehensive restructuring, sources say.

As previously reported, a crossover group of PIK toggle notes, cash pay notes and term loan lenders is working with Paul Weiss as counsel and Houlihan Lokey as financial advisor. A separate group of term loan lenders is working with Wachtell as counsel and Ducera as financial advisor. Neiman Marcus is advised by Lazard and Kirkland & Ellis.

Neiman’s cash pay notes due 2021 traded today at 62.25, according to TRACE, up from 60.25 on Wednesday. The company’s PIK notes due 2021 traded on Wednesday at 57.250, also according to TRACE. Neiman’s term loan was quoted at 83.25/84.25, according to a trading desk. The company’s capital structure as of Oct. 28, 2017, is shown below.
 
Advisors for both lender groups were in confidential discussions ahead of earnings when the company reported total revenue of $1.12 billion for the first quarter of fiscal 2018, up 3.8% from $1.08 billion year over year, sources say. At the same time, for the period ended Oct. 28, 2017, the Dallas-based department store chain’s adjusted EBITDA increased 50 bps to $123.5 million, compared with $122.9 million in the first quarter of 2017.

On a conference call with lenders to discuss first-quarter results, Neiman’s management said it was evaluating options to address its liquidity and capital structure. Management highlighted that the company’s term loan is the first to mature, in 2020. The company said it continues to look at ways to manage its capital structure and liquidity but had nothing related to those matters to further report on the call at the end of November.

Neiman Marcus, Lazard and Kirkland did not respond immediately to a request for comment. Advisors for the lenders also did not respond to requests for comment.

Neiman has engaged with advisors to its lenders on debt restructuring options since last year, Reorg previously reported. Back in September, the company floated a loose proposal to extend the maturity date of its secured and unsecured debt. Neiman’s offer was not pursued further by the lenders’ advisors or presented formally to their constituents, sources told Reorg at the time.