Saks Global’s potential path into the future might be narrowing.
While industry dealmakers said earlier this week that the retailer was in talks with Amazon as it races to fix its finances, a source close to the situation threw cold water on the notion that the talks had gone very far.
They also said that Richard Baker, chief executive officer of Saks Global, did not meet with Amazon founder Jeff Bezos, as was widely buzzed about.
The rumors and speculation that Amazon and Saks are close to a deal for Amazon to provide additional funding for Saks or that Richard Baker met with Jeff Bezos are unfounded, said the source.
There is always some down-to-the-wire confusion when high-profile companies are fighting for their financial futures.
Saks Global missed a more than $100 million interest payment on Dec. 30 and is now in the midst of a 30-day grace period where it can explore its options.
Increasingly, experts see a bankruptcy in the offing, although Baker has been said to be looking to avoid a filing. On Wednesday, Standard & Poor’s downgraded Saks Global’s credit rating to “selective default” and said, “We do not believe the company will make the payment within its 30-day grace period given its ongoing liquidity issues.”
Even if a Saks-Amazon deal isn’t coming together right now, the two companies share close ties.
Amazon helped Saks Global buy Neiman Marcus Group in a $2.7 billion deal just over a year ago that ultimately left the retailer struggling under too much debt.
The e-commerce giant also hosts a Saks shop that launched last year and has been keen to truly break into the luxury space in fashion after years of effort.
But given just how far in the hole Saks Global is — the company now has $2.8 billion in bonds, bank debt and a long list of past-due bills from vendors — Amazon could also decide to step in later if the company does file for bankruptcy.
If that were the case, Amazon probably wouldn’t be the only interested player.
Authentic Brands Group, which has its own ties with Saks Group through a joint venture, is also said to be taking an interest in the process. And if it does go to bankruptcy court, that’s familiar ground for the brand management company that has grown to annual retail sales of $32 billion, in part by scooping up failed businesses.
A spokesperson for Saks Global did not immediately comment and Amazon declined to comment.
