JCPenney Files Draft Asset Purchase Agreement
J. C. Penney Company, Inc. (OTCMKTS: JCPNQ) today announced that it has filed a draft asset purchase agreement (“APA”), which tracks the terms of the previously announced letter of intent, to sell JCPenney. All parties are working to conclude negotiations and intend to utilize the ongoing mediation process to help achieve that goal. Key terms of the draft APA are as follows:
- Brookfield Asset Management, Inc (“Brookfield”) and Simon Property Group (“Simon”) will acquire substantially all of JCPenney’s retail and operating assets (“OpCo”) through a combination of cash and new term loan debt.
- The formation of separate property holding companies (“PropCos”), comprising 160 of the Company’s real estate assets and all of its owned distribution centers, which will be owned by the Company’s Debtor-in-Possession and First Lien Lenders (“First Lien Lenders”).
- The OpCo and PropCos will enter into a master lease with respect to the properties and distribution centers moved into the PropCos.
“This is another important milestone in our restructuring plan, bringing us one step closer to finalizing the APA, closing the sale process and exiting Chapter 11 ahead of the December 2020 holiday season,” said Jill Soltau, chief executive officer of JCPenney. “Our talented team is focused on working with Brookfield and Simon to build on our over 100-year history of serving customers and working seamlessly with our vendor partners. We look forward to completing this sale and continuing our progress implementing our Plan for Renewal to Offer Compelling Merchandise, Drive Traffic, Deliver an Engaging Experience, Fuel Growth and Build a Results-Minded Culture.”
Once finalized, the OpCo transaction will be subject to Court approval and other closing conditions. A hearing to seek Court approval for the transaction is expected to be scheduled for early November 2020. If Court approval is received and the closing conditions in the APA are met, it is expected that the OpCo sale will close in advance of the December 2020 holiday season. JCPenney’s operating assets will then conduct business outside of the Chapter 11 process under the JCPenney banner with Simon and Brookfield as its owners. The First Lien Lenders are expected to acquire ownership of the PropCos through the Company’s Plan of Reorganization, which will be completed following the closing of the OpCo transaction.