Federated Says Banks Paying Off on Macy’s Note
CINCINNATI (AP) _ Federated Department Stores Inc. said Thursday banks have paid off the remainder of a $400 million debt that R.H. Macy & Co. Inc. owed after buying two Federated divisions in 1988.
Macy, which filed for bankruptcy court reorganization on Monday, bought the Los Angeles-based Bullock’s stores and San Francisco-based I. Magnin in 1988, in exchange for ending its bidding war with Campeau Corp. of Toronto to buy Federated.
Campeau’s borrowings to buy Federated helped plunge Federated and its associated company, Allied Stores Corp., into Chapter 11 reorganization in January 1990 with more than $7.7 billion in debt.
Federated and Allied hope to emerge from reorganization next week as a merged, publicly traded Federated Department Stores Inc.
Four Japanese banks which hold a letter of credit that Macy used to buy Bullock’s and I. Magnin have agreed to pay Federated $48 million in cash remaining from Macy’s 1988 debt, Federated spokeswoman Carol Sanger said Thursday. Federated expects to receive the money before March 21, in the first quarter of its fiscal year.
Ms. Sanger said the banks will be creditors of Macy.
Macy filed for bankruptcy court protection after it was unable to handle debt from its 1986 leveraged buyout and the Bullock’s-I. Magnin purchase.