Retailer JC Penney left for dead, is being resuscitated by two of the nation's largest landlords potentially saving 70,000 jobs.
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According to an audio recording of a status hearing Wednesday obtained by FOX Business, the troubled retailer has reached an agreement in principle with its landlords, Simon Property Group and Brookfield Property Partners valued at around $800 million.
"We are in a position to move this into the end zone," said Joshua Sussberg, a lawyer representing JC Penney. "And we are in a position to do exactly what we set out to do at the very beginning of these cases, and that is preserve 70,000 jobs, a tenant for landlords, a vendor partner and a company that has been around for more than a century."
The move, which is expected to be confirmed within the next 24 hours, will keep the retail chain afloat after the company filed for bankruptcy back in May as its stores, which were already facing challenges, took a turn due to the coronavirus pandemic.
Sussberg noted that JC Penney has executed a letter of intent with Simon and Brookfield including the terms of the agreement that is expected to be made public as early as Wednesday evening.
The deal would give JC Penney an enterprise value $1.75 billion, including $300 million in cash from Simon and Brookfield and $500 million in new debt. In addition, there will also be a loan of $2 billion from the company's existing lender, Wells Fargo, and a FILO loan of approximately $310 million.
TickerSecurityLastChangeChange %WFCWELLS FARGO & COMPANY23.84-0.13-0.54%
"What that all will do based on significantly negotiated sources and uses among the parties, it will put the company in a position where it will have approximately $1 billion at the close of the transaction, subject, of course, to the working capital adjustment and the payments of costs expenses associated with the transaction," Sussberg added.
According to the terms of the agreement outlined by Sussberg, one party will own approximately 161 stores while the other will hold distribution centers, subject to the terms of the lease agreement that has been negotiated as between Simon and Brookfield and the lenders.
He added that the JC Penney intends to seek approval on the transaction beginning in early October.
As part of its bankruptcy reorganization, JC Penney said it planned to permanently close nearly a third of its 846 stores in the next two years, which would leave the retailer with just over 600 locations.
Reuters was first to report the deal.
The Associated Press contributed to this report.