Is A Sale Leaseback Evil, or Just Smart Business?
Bankrupt retailer Mervyn's is suing Sun Capital and Cerberus for pushing it into Chapter 11 with its sale-leaseback-driven LBO. We covered the method used by Mervyns’s PE backers to profit from the otherwise failed buyout by selling off its real estate, and also exactly how much money they made. It's also detailed on page 13 of Marvyns' 57-page claim, which I posted below. Depending on your outlook, you might see Sun and Cerberus’s move as either brilliant business or sheer evil. The sale-leaseback is nothing new, but doing it for hefty dividends to an already hurting company like Mervyns doesn’t exactly scream “turnaround saint.”
4 September 2008•2 mins read
