HBC Closes U.S. $500 Million Equity Investment by Rhône Capital

12/6/17

TORONTO & NEW YORK--(BUSINESS WIRE)--HBC (TSX: HBC) and Rhône Capital today announced the closing of the previously announced U.S.$500 million equity investment by an affiliate of Rhône Capital (together with Rhône Group and affiliates, “Rhône”) as part of a global, multi-faceted strategic relationship with Rhône and WeWork Companies. The net proceeds from the transaction will be used to repay outstanding borrowings on the Company’s asset-based revolving facility, which will reduce interest expense and strengthen HBC’s balance sheet.

HBC issued a total of 50,919,608 series “A” 8-year mandatory convertible preferred shares (“Preferred Shares”) for an aggregate purchase price of U.S.$500 million (C$632 million). The Preferred Shares are convertible into the Company’s common shares (“Common Shares”) at U.S.$9.82 (C$12.42) per share, which conversion price is subject to adjustment from time to time in accordance with the terms of the Preferred Shares.

In connection with the closing of the transaction, HBC has appointed M. Steven Langman, Managing Director of Rhône, and Eric Gross, Managing Partner of WeWork Property Investors, to the board of directors (the “Board”) of HBC.

Sale of Lord & Taylor Fifth Avenue Building

HBC also announced the receipt of a deposit in the amount of U.S.$75 million (C$95 million) in connection with the previously announced sale of the Lord & Taylor Fifth Avenue building to an affiliate of WeWork Property Advisors in a transaction valued at U.S.$850 million (C$1.075 billion), subject to customary adjustments. The deposit is non-refundable subject to certain limited exceptions.

It is currently expected that the sale of the Lord & Taylor Fifth Avenue building will close no later than August 10, 2018, subject to the satisfaction of applicable conditions.

Quarterly Dividend

HBC also announced today that its Board has approved HBC’s regular quarterly dividend to be paid on January 15, 2018, to shareholders of record at the close of business on December 29, 2017. The dividend is in the amount of $0.0125 per Common Share and is designated as an “eligible dividend” for Canadian tax purposes. The declaration of dividends is at the discretion of HBC’s Board.

About HBC

HBC is a diversified global retailer focused on driving the performance of high quality stores and their all-channel offerings, growing through acquisitions, and unlocking the value of real estate holdings. Founded in 1670, HBC is the oldest company in North America. HBC's portfolio today includes formats ranging from luxury to premium department stores to off price fashion shopping destinations, with more than 480 stores and over 66,000 employees around the world.

HBC's leading banners across North America and Europe include Hudson's Bay, Lord & Taylor, Saks Fifth Avenue, Gilt, Saks OFF 5TH, Galeria Kaufhof, the largest department store group in Germany, and Belgium's only department store group Galeria INNO.

HBC has significant investments in real estate joint ventures. It has partnered with Simon Property Group Inc. in the HBS Global Properties Joint Venture, which owns properties in the United States and Germany. In Canada, it has partnered with RioCan Real Estate Investment Trust in the RioCan-HBC Joint Venture.

About Rhône

With over 20 years of investing experience, Rhône is a global alternative investment management firm with approximately $5.5 billion in assets under management. In addition to its real estate joint venture with WeWork, the firm focuses its private equity investments in market leading businesses with a pan-European or transatlantic presence and global growth opportunities. Rhône, which is currently investing capital from its fifth private equity fund, has invested in a diversified portfolio of companies including those in the chemical, consumer product, food, packaging, specialty material, business services and transportation sectors.

About WeWork

WeWork is a community for creators, providing more than 150,000 members around the world with space, community, and services through both physical and virtual offerings. WeWork’s mission is to help create a world where people work to make a life, not just a living. WeWork currently has more than 170 physical locations in over 56 cities and 18 countries around the world. WeWork was founded in New York City in 2010 by Adam Neumann and Miguel McKelvey. Follow us @WeWork on Twitter, Instagram, and Facebook or visit www.wework.com to find out more.

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