September 9, 2020 – At a 17-minute hearing, counsel for the Debtors (Joshua Sussberg of Kirkland & Ellis) addressed “breaking stories” as to his client and outlined terms agreed amongst the Debtors; prepetition lenders; and purchasers Simon Property Group ("Simon") and Brookfield Property Group ("Brookfield") that would push efforts to save J.C. Penney “into the endzone” and save 70,000 jobs.
Mr. Sussberg outlined the terms of a $1.75bn sale transaction and a related recapitalization; terms which he expected would be more fulsomely disclosed by the end of the day on September 10th. What the Debtors have in hand now is a non-binding letter of intent that has been executed with Simon amd Brookfield, but Mr Sussberg was confident that the LOI would develop into an executed asset purchase agreement (as well as a Plan and Disclosure Statement) over the next ten days. Following some “screaming matches,” he commented, the parties are “at a place now with significant momentum…”
As to the deal with Simon and Brookfield, Mr. Sussberg noted the sale “Contemplates a $1.75bn total enterprise plus a post-closing earnout and a significantly negotiated capital adjustment."
The recapitalization includes (i) a $300.0mn “equity check” from Simon and Brookfield, (ii) $500.0mn of financing from DIP lenders (the “Opco Takeback Paper”), (iii) $2.0bn of new ABL financing from existing lenders led by Wells Fargo and (iv) a $300.0mn FILO facility; which will together leave the Debtors with $1.0bn at the close of the transactions.
Mr Sussberg has promised to make requested cleansing materials available as soon as the close of play on September 10th.
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