Marble Ridge Highlights Other Investors and Credit Experts Are Voicing Same Concerns about the Viability of Neiman's Financial Condition and Lack of Disclosure

NEW YORK, Dec. 26, 2018 /PRNewswire/ -- Marble Ridge today sent the following letter to the Board of Directors of The Neiman Marcus Group Inc. highlighting that other investors, in addition to Marble Ridge, as well as credit experts are voicing similar concerns about Neiman's financial condition, including raising questions regarding the transfer of MyTheresa and other assets, and Neiman's  disclosures regarding such matters. In its letter, Marble Ridge makes clear that Neiman's assertions that Marble Ridge has made inaccurate contentions about Neiman are baseless and demands Neiman withdraw such statements by no later than 3pm CT on Friday, December 28.

December 26, 2018

RE: Investors' Concerns About Neiman Marcus' Financial Condition and Lack of Disclosure  

Dear Members of the Board of Directors,

As you surely must know, given information on the public record and the actual facts, the Counterclaims filed by Neiman Marcus Group, Inc. and related parties against Marble Ridge are meritless and retaliatory, solely meant to intimidate and silence both Marble Ridge and, we believe, other investors from raising legitimate concerns about the financial condition of Neiman Marcus and the actions of the Board of Directors and its conflicted counsel.

They do nothing to avert the eyes of Neiman's creditors from serious concerns regarding Neiman's financial condition and Neiman's attempts, in our opinion, to cover this up. In fact, we believe Neiman's actions have only emboldened other creditors to seek similar redress.

They do nothing to change the charges in the Petition recently filed against Neiman Marcus and the related entities in the District Court of Dallas County, Texas that they have engaged in misconduct including an alleged transfer of assets of approximately $1 billion of value, improperly and intentionally stripping these assets away from creditors for no consideration.

They do nothing to silence the concern of others regarding Neiman. Most recently, Covenant Review issued a report on December 17, 2018 raising many of the same concerns as Marble Ridge's.  In pertinent part, the Report refers to Neiman's recently filed Form 8-K that includes its Presentation to Creditors, and states:

"Following the [November 30, 2018] Presentation, questions remain that only the Company can definitively answer.

Questions that have not been answered by the Presentation include the following:

• What was the Company's Interest Coverage Ratio, pro forma for the transfers of the MyTheresa Business and the three real properties? Investors should also ask the Company to disclose what covenant-calculated "Consolidated EBITDA" was pro forma for those transfers, including what add-backs the Company took. If the Interest Coverage Ratio was not at least 2x pro forma, the Company would not have been permitted to use any basket build capacity (not even the $200 million starter amount) to justify these transactions.
• How much Restricted Payments basket build capacity did the Company have at the time that it moved the MyTheresa Business and the three real properties to Unrestricted Subsidiaries? While the Presentation includes disclosure that the Company had "over $550 million of Permitted Investments/Restricted Payments capacity," it did not elaborate as to specifically how much Restricted Payments basket build capacity it had built at that time. Investors should also ask the Company to disclose how "Consolidated Net Income" was calculated under the Senior Notes Indentures, including all add-backs the Company took in making that calculation.
• What was the value that the Company ascribed to all of the assets moved to Unrestricted Subsidiaries at the time they were moved? Based on the information contained in the Presentation, it appears that the Company valued the MyTheresa Business at ~$280 million at the time of the transfer and currently values the three real properties at ~$100 million.

There are a number of investors seeking the answers to these questions, and thus far the Company has not provided the full picture to investors seeking to understand how the Company was able to move the MyTheresa Business and the three real properties to Unrestricted Subsidiaries.

On September 24, 2018, we published a report analyzing the issues raised by MRC in its September 18, 2018 letter to the Company. In its letter, MRC raised many of the same questions that were discussed above."

Moreover, on December 19, 2018 Debtwire issued a Report indicating a ZERO recovery to bondholders under various valuation scenarios without the valuable MyTheresa assets. 

Given the obvious false premise of the allegations in the Counterclaims, we demand that Neiman withdraw its meritless Counterclaims no later than 3pm CT this Friday.

Respectfully,
MARBLE RIDGE CAPITAL
Daniel Kamensky

CONTACT: Cathryn Vaulman, 212-521-4847, [email protected]

SOURCE Marble Ridge Capital LP

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