(Bloomberg) -- Lenders to discount retailer Big Lots Inc. are talking to Nexus Capital Management about how the private equity firm would finance its $760 million bid to buy the company and bring it out of bankruptcy.
Nexus has agreed to pay $2.5 million in cash plus an amount needed to repay Big Lots’ major lenders, according to court records. There’s no deal between the banks and Nexus, Big Lots attorney Brian Resnick said during the retailer’s first bankruptcy hearing on Tuesday. He didn’t name the lenders or provide any other details about the negotiations.
Big Lots’ lenders include Tiger Finance and Whitehawk Finance, according to a regulatory filing. The company owes $433.6 million under an asset-backed loan and $122.5 million under a traditional term loan, court records show.
The retailer was in court seeking approval to fund its bankruptcy by refinancing much of its debt. No decisions were immediately announced by the court. The proposed package would give Big Lots $35 million in fresh cash and leave it with $707.5 million in debt that must be paid off under the Nexus bid, according to court documents.
Big Lots plans to shut at least 300 of its 1,300 stores and hold a court-supervised auction for the rest of the business in hopes of remaining in operation. Nexus would be the initial bidder, and it take over the company if no higher offer is made at an auction.
The Columbus, Ohio-based company filed for Chapter 11 bankruptcy earlier this week, listing assets and liabilities of $1 billion to $10 billion each. After an initial boost in sales at the start of Covid-19 pandemic, Big Lots struggled with higher labor costs, supply shortages and declining sales, Resnick said Tuesday.
The case is Big Lots Inc., number 24-11967, in the US Bankruptcy Court for the District of Delaware.
--With assistance from Jonathan Randles and Eliza Ronalds-Hannon.
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