Investor Bid to Rescue Debt-Burdened Macy’s Fails : Retailing: The failure of Laurence Tisch’s bid increases the chances that the chain will have to file for Chapter 11 bankruptcy protection, analysts say.

A last-minute bid by billionaire Laurence A. Tisch to rescue ailing R. H. Macy & Co. broke down late Friday, raising the likelihood, analysts said, that the troubled retailer will be forced to seek bankruptcy court protection from creditors, possibly as early as this weekend.

Tisch, a Macy’s investor and head of CBS Inc. and the Loews Corp. tobacco, hotel and insurance conglomerate, had offered earlier this week to acquire the retailer. A key point in the plan required bondholders to sell at a loss to Loews Corp.

But even as the Macy’s board of directors was considering that proposal, as well as other plans to bail the company out, a major creditor rejected the offer Friday afternoon, essentially pulling the plug on Tisch’s deal. Talks broke down when Prudential Insurance Co. of America balked at refinancing the $811 million of mortgage loans it holds on about 70 Macy stores.

“The Loews proposal was conditioned upon the cooperation of various other parties, but was rejected by a major Macy’s creditor this afternoon,” said a statement issued by Loews that did not identify the creditor. Loews said it had broken off its acquisition talks with Macy’s, the owner of Bullock’s and I. Magnin department stores concentrated in California.

Macy’s continuing financial problems have raised the possibility that the retailer will sell its I. Magnin and Bullock’s operations. Sources have said Macy’s is actively trying to sell the 24-store I. Magnin chain but hasn’t found a buyer. However, analysts have said that Macy’s isn’t likely to get enough money from selling Bullock’s and I. Magnin to ease its woes.

Macy’s confirmed Friday that the talks with Loews had ended, but sources said the retailer’s directors were scheduled to meet throughout the weekend to consider other refinancing plans and moves to resolve the company’s deepening financial crisis.

Tisch’s offer called for a large cash infusion by Loews into Macy’s, as well as assurances that all of Macy’s suppliers would be paid once the deal was closed. Tisch, who holds a 15.6% stake in Macy’s, was expected to inject as much as $1 billion to buy out stockholders and bond owners at prices well below the face value of their investments, a move that would have removed a big portion of Macy’s crippling interest payments.

Analysts said Friday that Tisch’s pullout leaves Macy’s in such a precarious financial condition that the retailer, bogged down by $3.5 billion in debt, faces little choice but to file for bankruptcy protection from its creditors.

“A bankruptcy of some sort is all but inevitable,” said Kurt Barnard, publisher of Retail Marketing Report in New York.

Such a filing would make Macy’s, the site of the movie “Miracle on 34th Street” and the sponsor of New York’s annual Thanksgiving Day parade, the third major national retailer in three years to seek bankruptcy protection.

Campeau Corp., operator of the Allied and Federated department stores, went into bankruptcy in 1990, and Carter Hawley Hale Corp., owner of the Broadway stores, filed last February. Both those filings followed dismal Christmas sales, one of the major reasons for Macy’s current woes.

Among Macy’s most immediate financial problems are an estimated several hundred million dollars worth of payments that the company said it would pay its suppliers today, two weeks after they were originally due.

A Macy’s spokesman declined Friday to say whether those payments would be made. However, a representative of Chemical Bank, one of the company’s key lenders, said Macy’s was not expected to get additional money from its banks to make its vendor payments.

Analysts have repeatedly said that unless vendors get paid within the next several days--or receive strong assurances that they will be paid in the future--they will refuse to ship Macy’s the merchandise its 250 stores need for the spring season, shipments that are due to begin in volume next month. And without fresh merchandise, Macy’s won’t be able to attract customers.

Even Tisch’s last-minute rescue plan called for the retailer to file what is known as a “prepackaged” bankruptcy, a plan that essentially allows creditors to accept bailout terms that are then ratified by a bankruptcy court, often within just months of the filing. Under a traditional bankruptcy, the bailout terms are thrashed out under the court’s jurisdiction, a process that can cost millions of dollars and take several years.