Kirsten Luce for The New York TimesAt Barneys New York Warehouse Sale.4:05 p.m. | Updated
Barneys New York, one of New York’s bastions of high fashion, has gained a new owner for the second time in five years.
The hedge fund Perry Capital, which is Barneys’ biggest bondholder, announced on Monday that it had taken control of the retailer, concluding a long-running effort to reorganize its finances after laboring under nearly $600 million in debt.
Under the terms of the deal, Perry Capital and another major bondholder, the Yucaipa Companies, will swap their debt holdings for equity stakes in Barneys, shedding about $540 million in long-term debt. Istithmar, the Dubai-based private equity firm that bought the retailer in a 2007 leveraged buyout, will keep a minority stake in the company.
The deal, which had been in the works for several months, will allow Barneys to stay out of bankruptcy, an important accomplishment for any retailer hoping to turn itself around.
“Financially, we’ve been moving in the right direction,” Mark Lee, the company’s chief executive, told DealBook in a telephone interview. “What we haven’t had is a balance sheet that made perfect sense.”
The announcement is the culmination of years of work by Barneys, which had amassed a coterie of advisers to help reduce its huge debt load. Helping the company was its small number of creditors, which essentially amounted to Perry Capital and Yucaipa, as well as Citigroup and Wells Fargo.
“We’ve been able to put a deal together that converted that debt into equity, and do it in a really healthy way,” Richard Perry, the chief executive of Perry Capital, said in an interview. “We decided that, rather than get a coupon, we’d rather get long-term equity of this company.”
Under Mr. Lee, the company has shuffled some brands along with renovating its Madison Avenue store. The new ownership will let it move more quickly with overhaul plans, he said — the ground floor is scheduled to be renovated by September, for instance. A new Web site will be introduced in a few weeks.
Mr. Lee joined the company from Gucci in the fall of 2010, and soon after made high-profile hires and dismissals. Simon Doonan, the longtime creative director, was given a new role as “creative ambassador-at-large,” while Mr. Lee hired Amanda Brooks, Dennis Freedman and Daniella Vitale to fill various roles.
“Having a C.E.O. and a management team in place that’s world class, that makes everything easier,” Mr. Perry said.
Ms. Brooks, Barneys’ fashion director, recently left the company after just over a year on the job. Mr. Lee said that her departure was “a personal decision of Amanda,” and there was “nothing more to it than that.”
Asked if they had struck any parts of the deals at Fred’s, the restaurant inside of Barneys’ Madison Avenue store, Mr. Perry already sounded like an owner.
“Now that the deal is done, everybody can go to Fred’s and have a good lunch — ” Mr. Lee was saying. Mr. Perry interrupted him: “And it offers dinner also, you should know.”
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