Mall owners sign letter of intent to buy Bon-Ton as going concern

Bankruptcy auction delayed until April 16

Bon-Ton will liquidate.

A group of investors, including U.S. mall owners, signed a letter of intent Friday to acquire substantially all of the assets of The Bon-Ton Stores from bankruptcy and the company is seeking court approval to pay the investors’ fees and expenses, according to court documents.


The investor group includes Great Neck, N.Y.-based commercial real estate investment and management firm Namdar Realty Group; Columbus, Ohio-based shopping center real estate investment trust Washington Prime Group and New York-based investment firm DW Partners LP. Reuters reported last week that mall owners Namdar and Washington Prime could jointly bid on Bon-Ton’s assets.

Bon-Ton announced Monday that the investor group that signed the letter of intent wants to acquire the company as a going concern in a bankruptcy court-supervised sale process. The company said it and the investor group are
in the process of finalizing an asset purchase agreement in advance of an auction, which is now scheduled
to be held on April 16.

Bill Tracy, president and chief executive officer of Bon-Ton, put out a written statement late Monday thanking Bon-Ton employees, vendors and other partners. He said the company would remain focused on serving customers through the transition.

“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,” Tracy said. “With the help of our advisors, we will evaluate all qualified bids and are committed to maximizing value and pursuing the best path forward for the company and our stakeholders.”

DW Partners is an alternative asset manager focusing on investment in credit markets across a broad range of asset types and strategies.

Namdar Realty Group is a privately held commercial real estate investment and management firm that owns and operates more than 30 million square feet of commercial real estate in the United States. Washington Prime Group is a retail real estate investment trust and a recognized leader in the ownership, management, acquisition and development of retail properties.

The purchase price would include “an aggregate purchase consideration sufficient to have a minimum excess availability of 22.5% at closing and a minimum aggregate cash payment of no less than $128 million,” according to court documents.

Bon-Ton is the parent company of Boston Store and has its corporate headquarters in Milwaukee and York, Pennsylvania. The company filed for chapter 11 bankruptcy earlier this year. Bon-Ton’s assets were scheduled to be auctioned Monday, but the company pushed the auction to Tuesday over the weekend. On Monday afternoon, the company once again pushed the auction back, this time to April 16.

As of the bid deadline on April 4, the company had received several bids for individual or groups of its assets and four bids for substantially all of the company’s assets. The Namdar/Washington Prime bid was the only one that plans to continue the company as a going concern and the only one that does not plan to liquidate the assets and wind-down the Bon-Ton business, according to court documents.

Bon-Ton says a sale to the mall owner group would allow for its continued operation as a business, the preservation of relationships with the majority of landlords and vendors and the continued employment of most Bon-Ton employees.

On Friday, the company filed a notice with the state Department of Workforce Development indicating that 2,255 Wisconsin employees could potentially lose their jobs if it company does not find a going-concern buyer.

Those employees work at the company’s corporate office in downtown Milwaukee and at stores in Brookfield, Eau Claire, Glendale, Greendale, Janesville, Madison, Marshfield, Milwaukee, Racine and Wauwatosa, according to the notice.

Besides Wisconsin, Bon-Ton has filed WARN notices in several other states including Ohio, Pennsylvania, Indiana and South Dakota over the last two days. It is legally required to provide employees with 60 days notice before they lose their jobs.

Bon-Ton, which has 22,745 employees and 254 stores, previously announced plans to close 47 stores this year, including nine stores in Wisconsin. The only store in the Milwaukee area that is slated to close at this time is the Boston Store clearance store on South 27th Street in Milwaukee.

The company is now seeking court approval to pay up to $500,000 in fees and expenses for the potential buyers to continue their due diligence. A bankruptcy judge in the U.S. District Court for Delaware will consider the request on Wednesday.

“The debtors are hopeful that the payment of the investor group’s fees and expenses as set forth herin will prove to be the bridge between the debtors’ marketing and sale efforts and the ultimate consummation of a value-maximizing transaction,” the company’s court filing says.

According to the letter of intent, the Namdar/Washington Prime group would offer employment to many current Bon-Ton employees with “benefit plans substantially similar in the aggregate to those provided by (Bon-Ton).” The group also has no plans to replace existing members of the management team.

The deal is subject to the group being declared as the winning bidder and securing credit financing for the business, along with other conditions.

The letter of intent is only good until April 15 or until the parties reach a definitive agreement, whichever occurs first.

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