Hudson’s Bay Co. has increased its asset-based revolving credit facility by $350 million to a total of $2.25 billion.
The Toronto-based retailer said Tuesday that $100 million of the $350 million would finance the company’s expansion into the Netherlands beginning later this year involving opening Hudson’s Bay department stores there.
The move comes as Hudson’s Bay has reportedly been in preliminary talks with Macy’s Inc. regarding a possible merger or takeover. HBC is also examining alternative acquisitions and has in months past been in talks with the Neiman Marcus Group.
Commenting on the increased financial flexibility, Paul Beesley, HBC’s chief financial officer, said “This amendment to our global ABL provides additional financial flexibility to HBC. Our solid capital structure is supported by long-term mortgages on our Fifth Avenue flagships [Lord & Taylor and Saks Fifth Avenue], and we are pleased to strengthen our balance sheet even further with this amendment. As we open our first Hudson’s Bay stores in the Netherlands later this year, we will be able to rely on this facility to help finance our inventory and other working capital requirements associated with the entry into this market.”
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The Global ABL allows HBC to use its inventory and accounts receivable as collateral to finance working capital requirements, capital expenditures and other general corporate purposes.
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The $2.25 billion facility matures on Feb. 5, 2021. HBC said the key terms are consistent with the initial global ABL facility closed in February 2016.
At the end of fiscal 2016, there was a total of $330 million outstanding borrowings on the global ABL, as compared to $939 million at the end of the third quarter of 2016.
Earlier this year, HBC said it plans to open up to 20 stores in the Netherlands, including Hudson’s Bay and Saks Off 5th units, over the next few years, beginning in summer 2017. The first store will be a flagship for Hudson’s Bay in Amsterdam. Hudson’s Bay is combining three existing buildings to create the new property.
Currently, HBC has more than 480 stores and 66,000 employees. The company operates Hudson’s Bay, Lord & Taylor, Saks Fifth Avenue, Gilt, Saks Off 5th, Home Outfitters, Galeria Kaufhof, Galeria Inno and Sportarena.
To fund its 2015 acquisition of Kaufhof, Inno and Sportarena in 2015, HBC formed real estate joint ventures, partnering with Simon Property Group and RioCan Real Estate Investment Trust.