S&P has a Saks problem
A Saks buyout could leave the luxury retailer more indebted than the worst of shopaholics.
Standard & Poor’s said yesterday it is weighing a possible downgrade of Saks’ already junk-rated bonds, citing the risk of a leveraged buyout that could saddle the chain with even more debt.
The move followed an exclusive report Friday on nypost.com that real-estate mogul Barry Sternlicht’s firm, Starwood Capital, has submitted a bid for Saks.
Worries about the debtload sent Saks shares tumbling nearly 6 percent yesterday, losing 95 cents to close at $14.94. Saks shares on Friday had surged 8.3 percent on The Post’s report.
“In our view, it is likely that US department store Saks will be acquired,” S&P analyst David Kuntz wrote in a research report.
Sources told The Post that Sternlicht’s plan for Saks would pile debt onto Saks while splitting the company’s retail operations from its real-estate assets.
Insiders said Saks could ultimately fetch between $17 and $18 a share in a process that’s being run by Goldman Sachs. Initial bids submitted earlier this month, however, were likely in the $15-to-$16 range, according to one source briefed on the process.
Sternlicht is bidding against Canada-based Hudson’s Bay, owner of the Lord & Taylor chain.
The identity of the third bidder couldn’t be determined, but speculation has pegged a Middle Eastern sovereign-wealth fund, possibly Qatar.
