U.S. mall owners Namdar Realty Group and Washington Prime Group Inc (WPG.N) are in talks to acquire U.S. department store operator Bon-Ton Stores Inc (BONTQ.PK) out of bankruptcy, people familiar with the matter said on Tuesday.
Namdar’s and Washington Prime’s bid for Bon-Ton offers a path for the retailer to survive, three sources said. Firms specializing in liquidation plan to submit a $740 million offer for Bon-Ton in partnership with its bondholders. If that bid were to prevail, the company would be dismantled.
Bon-Ton, which filed for bankruptcy in February with about 250 stores, is a significant tenant of both Namdar and Washington Prime malls. Its survival would help protect the value of these malls, the sources said. Namdar plans to work with its partner, Mason Asset Management, which jointly invests with Namdar and manages its properties, on the bid.
Bon-Ton extended the deadline for bids in its bankruptcy auction last week to April 4, after announcing it was in active discussions with a bidder whom it did not identify. That bidder is the consortium of Namdar and Washington Prime, according to the sources. [nL1N1RD01L]
Namdar and Washington Prime are still working on securing funding for the deal, and may use their properties to raise debt to finance the acquisition, the sources said. There is no certainty their bid will be successful, and it is possible the bid deadline is extended once again, one of the sources added.
Namdar and Mason declined to comment. Washington Prime and Bon-Ton did not immediately return requests for comment.
Liquidators and Bon-Ton’s bondholders, led by hedge fund Brigade Capital Management LP, have been calling for Bon-Ton’s wind down for months. Their $740 million offer for the company includes $540 million in cash and the bondholders’ debt, one of the sources said.
The bondholders’ bid would fund Bon-Ton’s wind-down, and would also give the retailer’s other creditors the option to acquire the department stores’ leases, intellectual property and shop fixtures. The creditors could then sell those assets to any parties interested in re-opening the stores, the sources said.
Namdar and Mason own about 130 malls across the United States and in recent years have acquired properties from several real estate investment trusts, including CBL & Associates Properties Inc (CBL.N), Pennsylvania Real Estate Investment Trust (PEI.N) and GGP Inc (GGP.N). It has also bought properties out of bankruptcy auctions.
Washington Prime, spun out of Simon Property Group Inc (SPG.N) in 2014, owns interests in 108 properties.