J.C. Penney Company Inc. announced that it has reached an agreement in principle to sell JCPenney through a court-supervised sale process to Brookfield and Simon Property Groups, two of JCPenney’s landlords. The deal is expected to be for $1.75 billion, which includes a combination of cash and new term loan debt.
The agreement contemplates the formation of a separate real estate investment trust and a property holding company, which will include 161 of the company’s real estate assets and all of its owned distribution centers.
“We have determined that an agreement with Brookfield and Simon, as well as the formation of separate real estate investment trusts owned by our first lien lenders, is the best path forward to maximize value for our stakeholders, ensure we keep the most stores open and associates employed and position JCPenney to build on our over 100-year history,” said Jill Soltau, chief executive officer of JCPenney. “The interest in our operations reflects our company’s strength and our loyal customer base.”
It is anticipated that the company will complete the auction and emerge from the Court-supervised process operating under the JCPenney banner in advance of the 2020 holiday season.
“As we continue to move through the sale process, our focus will remain on serving our customers and working seamlessly with our vendor partners,” Soltau continued. “We have been a trusted partner to all of our stakeholders since 1902, and we expect to continue that track record for decades to come under the JCPenney banner.”
As previously announced, JCPenney entered into a restructuring support agreement with lenders holding approximately 90% of its first lien debt to reduce the company’s outstanding indebtedness and strengthen its financial position. To implement the financial restructuring plan, the company filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
