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FEDERATED BUYS $500 MILLION OF MACY’S DEBT

SHARE FEDERATED BUYS $500 MILLION OF MACY’S DEBT

Federated Department Stores Inc. is spending nearly half a billion dollars to become a creditor in R.H. Macy & Co. Inc., in hopes that the two companies can combine to form the biggest U.S. department store retailer.

Federated's management, which helped bring Federated itself through a bankruptcy reorganization that ended in 1992, said Sunday it realizes that the complex bankruptcy reorganization that Macy's is undergoing may not allow an opportunity for the union."But if, as we get further into the process, we continue to believe that it will be in everyone's best interests . . . then the end result of a combined Federated and Macy's department store operation will be well worth whatever effort is required," said Allen Questrom, chairman and chief executive officer of Federated.

Any such outcome would require approval of other creditors and U.S. Bankruptcy Judge Burton R. Lifland, the New York judge overseeing Macy's Chapter 11 reorganization.

Federated said it closed a deal Friday with Prudential Insurance Co. of America to spend $449.3 million for half of the secured claim Prudential holds in the Chapter 11 reorganization of Macy's, the New York-based retailer.