Shearman & Sterling advised Bank of America (as lead arranger, agent and letter of credit issuer) and certain other asset-based lenders who have provided Macy’s Inventory Funding LLC, a newly formed financing vehicle, with a $3.15 billion asset-based inventory financing. The proceeds will be used by Macy’s and its subsidiaries to finance accrued payables obligations and finance the purchase of new inventory for upcoming merchandising seasons by the Macy’s group and to provide the Macy’s group with liquidity through the ongoing COVID-19 pandemic.

The asset-based credit agreement will mature in May 2024 and includes a short-term facility of $300 million that will mature in December 2020. The asset-based credit agreement also contains an accordion feature that will enable the company to request increases in the size of the facility up to an additional aggregate principal amount of $750 million. The new asset-based credit agreement is secured by all assets and common equity of the newly formed Macy’s Inventory Funding LLC, which has purchased the vast majority of Macy’s inventory, and which is the borrower under the new asset based credit agreement.

The financing involved the innovative use of various techniques to structure the initial acquisition of inventory from existing Macy’s group companies by the newly formed financing vehicle, setting up a new master agency purchasing agreement and using certain securitization-like and consignment arrangements to create the security and guarantee package necessary to support the secured asset-based credit agreement financing.

Macy’s along with its subsidiary Bloomingdale’s are one of the oldest and most recognized department stores in the world.

The Shearman & Sterling team below also included associates Polina Pristupa and Maeve Wilson. 

The Team