There could be a reprieve for Boston Store and its parent company, Bon-Ton, that would keep the department store from disappearing.
But the financial groups that loaned millions of dollars to Bon-Ton appear poised to fight that deal and want to shut down the business instead.
Bon-Ton said it has received a “signed letter of intent” from an investor group to buy the company and keep its stores open.
In a court filing Monday, Bon-Ton said more than 20,000 jobs and a 120-year-old business that is the “leading hometown department store” for millions of consumers in 23 states hang in the balance.
DW Partners, Namdar Realty Group and Washington Prime Group are bidding to buy Bon-Ton, which filed for Chapter 11 bankruptcy reorganization in February.
Details of a purchase agreement are still being hammered out, Bon-Ton said in a statement Monday night.
“We are pleased to have received this signed letter of intent and are advancing our discussions with the investor group to complete an asset purchase agreement as we proceed toward the court-supervised auction. With the help of our advisers, we will evaluate all qualified bids and are committed to maximizing value and pursuing the best path forward for the company and our stakeholders,” CEO Bill Tracy said.
DW Partners, of New York City, is an alternative asset manager. Namdar Realty Group, of Great Neck, New York, and Washington Prime Group, of Columbus, Ohio, are commercial real estate investment groups that own shopping centers and other retail buildings, including some that house Bon-Ton stores.
But the potential sale is not clear-cut because of objections by numerous debt holders and alternative bids. Bon-Ton received several bids for part of its assets and four bids for “substantially all” of its assets, the company said.
Aside from the bidders who signed the letter of intent, the other proposals all “contemplate the liquidation of (Bon-Ton’s) assets and a wind-down of (its) businesses,” Bon-Ton said.
A group called Second Lien Noteholders said it submitted a joint bid with several other entities to take over Bon-Ton, repay its loans and shutter the company.
Second Lien Noteholders consists of funds and accounts, managed by half a dozen private-equity firms, that hold $251.4 million worth of Bon-Ton’s debt, according to a document filed Monday.
The group said in the filing that it’s worried its bid won’t get fair consideration and that Bon-Ton “will attempt to tilt the playing field in favor of other bidders.”
Second Lien cited unexplained delays in the bidding schedule that “call into question the fairness of the bidding process” and said it is concerned that Bon-Ton will choose a bid with a “significantly lower purchase price” just because that option would keep the department stores operating.
An auction that had been scheduled Monday in U.S. Bankruptcy Court in Delaware has been delayed a week, until April 16.
Bon-Ton said, in its statement Monday night, the auction “is designed to achieve the highest or otherwise best offer.” The bid chosen will be subject to bankruptcy court approval.
Last Friday, Bon-Ton filed notices in Wisconsin and in the other states in which it operates saying it could close all of its stores and its Milwaukee headquarters, with layoffs starting in June. But the company held out hope it could avert the closings if a buyer came through.
In Wisconsin, the jobs of more than 2,200 employees are on the line.
There are two Boston Stores in Madison, at East Towne and West Towne malls, employing a total of 217 people. Seven other Boston Stores, three Younkers department stores and Bon-Ton’s corporate offices in Milwaukee also are awaiting their fate.
Bon-Ton, with 250 stores nationwide, including nine furniture galleries, operates stores under the names of Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers.
Bon-Ton said as the bankruptcy case continues, its department stores are operating as usual.
“The company’s stores remain open and are continuing to serve customers,” Bon-Ton said.
Several dozen of the stores already are slated to close, though. Bon-Ton announced in January that it will close 42 stores this spring, including the Boston Store in Beaver Dam. That would leave the company with 212 stores in 20 states.