THE LATEST FACTS ON SAKS
You only added to the rumor mill with the article "Saks Fifth Avenue has Seventh Avenue shaking" (Top of the News, Aug. 12). While you reported that one factor, Heller Financial, has stopped recommending Saks to its clients because it wants more financial information than Saks, a private company, will disclose, you failed to say that the other two factors mentioned in the story reinstated Saks on their recommended list.
In offering up a speculative quote that equity in Saks may have been "pulled out" and that Saks "didn't make its banking covenants," you overlook the reality that the equity investment made at the time Saks was acquired by Investcorp International remains fully intact. Moreover, Saks has been and remains in full compliance with all covenants, including those regarding profitability, net worth, and interest coverage.
And pointing out the staff consolidation announced last fall without also acknowledging the $250 million capital investment we unveiled at the same time gives the mistaken impression that we are retrenching. In a clear vote of confidence, our lenders agreed to an accelerated timetable for capital spending on remodeling and other improvements.
Also overlooked were the steps taken to significantly reduce our bank debt, including a triple-A financing backed by Saks's real estate assets and the planned $100 million prepayment of bank debt this fall as part of a securitized financing backed by our accounts receivable.Like our capitalization, our 67-year heritage of excellent relationships with vendors and factors, not to mention our tradition of always paying our bills on time, remains strong.
Melvin Jacobs, Chairman
Saks Fifth Avenue
Editor's note: The two factors who reinstated Saks did so after our story went to press. In interviews withBUSINESS WEEK, Saks executives did not mention a plan to prepay $100 million in bank debt.