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Investor Group Signs Letter Of Intent To Purchase Bon-Ton Ahead Of Auction

An investor group composed of DW Partners, Namdar Realty Group and Washington Prime Group has submitted a signed letter of intent to acquire Bon-Ton Stores, the retailer said in a statement. The parties agreed on a minimum bid of $128 million in cash and a total number based on Bon-Ton’s borrowing ability at closing, according to the letter.

The retailer 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, 2018. Namdar and Washington Prime, both of which are mall operators, already have a significant stake in Bon-Ton’s survival.

In February, Bon-Ton filed to reorganize under Chapter 11 bankruptcy, burdened by $572 million in debt due in December 2018. The retailer failed to make a $14 million interest payment to lenders in December 2017 and has not posted a profit since 2010. Unable to make the money required to pay off lenders, Bon-Ton sorely needed an acquiring party if it had any chance of staying alive instead of liquidating.

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But liquidation still isn’t out of the question. Some of Bon-Ton’s bondholders, which own approximately $250 million of the retailer’s debt, believe liquidation is the best option, with the company’s second lien lenders objecting to its initial decision to restructure. The bondholders, along with liquidator Great American Group, placed a $740 million offer for the company, according to sources cited by Reuters. If the recent investors’ bid either falls through — perhaps losing out to the second lien lenders’ liquidation bid — or can’t win court approval, Bon-Ton may have to liquidate.

The retailer’s 200+ stores and its e-Commerce and mobile platforms, under the Bon-Ton, Bergner’sBoston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers nameplates, are open and operating as usual.

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