The family behind Nordstrom Inc (NYSE:JWN) could be running into some trouble in trying to put together financing in place in a bid to take the retailer private.
Lenders are anxious about the retail industry, given dwindling mall traffic and the surprise bankruptcy filing of Toys ‘R’ Us last month, New York Post reported, citing insiders.
READ: Nordstrom shares rise further premarket on news family to take retailer private
The newspaper said that the family has been having difficulties putting together the deal, estimated to be worth above US$10bn, the sources said.
Deal in trouble?
“The financing has not worked out. I hear that the Nordstrom financing is not done and no one knows if it can be done,” a top retail industry expert with direct knowledge of the situation said, adding, “Toys R Us isn’t good for anyone.”
“This deal is in deep trouble,” a second source close to the talks said.
The Nordstrom family — whose fourth-generation brothers Blake, Erik and Peter run the company as co-presidents — had reached a deal in principle in September to sell preferred shares to private-equity firm Leonard Green & Partners to support the buyout.
Leonard Green was expected to decide on whether to commit by the end of September, according to a source, the newspaper reported, adding that the company's participation was contingent on bank financing at what it considered acceptable levels.
Online sales strategy
Officials at Nordstrom and Leonard Green didn’t respond to requests for comment on Sunday, the newspaper said.
Nordstrom operates 122 department stores and 221 off-price Nordstrom Rack stores.
The Nordstrom family wants to take the company private partly so it can invest in online initiatives away from the gaze of Wall Street, Cowen said in a recent analyst note.