As previously reported, on May 15, 2020, J. C. Penney Company, Inc. (“J. C. Penney” or the “Company”) and certain of its subsidiaries (together with the Company, the “Debtors”) commenced voluntary cases under chapter 11 of title 11 of the United States Code (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). Prior to the commencement of the Chapter 11 Cases, on May 15, 2020, the Company and its subsidiaries (together with the Company, the “Company Parties”) entered into a Restructuring Support Agreement (together with all exhibits and schedules thereto, and as amended to date, the “RSA”) with members of an ad hoc group of lenders and noteholders (the “Ad Hoc Group”) that held approximately 70 percent of the Debtors’ first lien debt as of such date.
On September 10, 2020, the Company entered into a non-binding letter-of-intent (“LOI”) with the Ad Hoc Group, Simon Property Group (“Simon”) and Brookfield Property Group (“Brookfield”) that is generally consistent with the framework of the restructuring process contemplated in the RSA. The LOI is non-binding and provides no guarantee that a transaction will be completed. The terms of any potential transaction are subject to definitive documentation that must be agreed upon by all parties and subsequently approved by the Bankruptcy Court. Consequently, there can be no assurance that the existing LOI will ultimately result in a final, approved sale or plan of reorganization. In connection with the LOI, the Company received a form of Asset Purchase Agreement Term Sheet and Credit Bid Term Sheet from the Ad Hoc Group summarizing the terms of the Ad Hoc Group’s credit bid (collectively, the “Term Sheets”). The Company has acknowledged receipt of the Term Sheets and has agreed to support the credit bid summarized in the Term Sheets. The Term Sheets have not been executed by any party, are not binding, do not reflect any input from Simon or Brookfield and have not been reviewed by or agreed to by Simon or Brookfield. In addition, the Term Sheets are expressly not part of the LOI and may contain terms that are inconsistent with the LOI.
In connection with the filing of the Chapter 11 Cases, J. C. Penney entered into confidentiality agreements (collectively, the “NDAs”) with certain lenders, noteholders and other creditors. Pursuant to the NDAs, the Company agreed to publicly disclose certain information (the “Cleansing Material”) upon the occurrence of certain events set forth in the NDAs and the Company’s non-amortizing senior secured priming multi-draw delayed draw debtor-in-possession term loan facility. A copy of the Cleansing Material is attached to this Current Report on Form 8-K as Exhibit 99.1.
The Cleansing Material includes a copy of the LOI as well as the Term Sheets. The other portions of the Cleansing Material were prepared solely to facilitate discussions with the parties to the NDAs and was not prepared with a view toward public disclosure and should not be relied upon to make an investment decision with respect to J. C. Penney. The Cleansing Material should not be regarded as an indication that the Company Parties or any third party consider the Cleansing Material to be a reliable prediction of future events, and the Cleansing Material should not be relied upon as such. The Cleansing Material includes certain values for illustrative purposes only and such values are not the result of, and do not represent, actual valuations, estimates, forecasts or projections of the Company Parties or any third party and should not be relied upon as such. Neither the Company Parties nor any third party has made or makes any representation to any person regarding the accuracy of any Cleansing Material or undertakes any obligation to publicly update the Cleansing Material to reflect circumstances existing after the date when the Cleansing Material was prepared or conveyed or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Cleansing Material are shown to be in error.
The information disclosed in this Item 7.01, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such a filing.
Additional Information on the Chapter 11 Cases
Court filings and information about the Chapter 11 Cases can be found at a website maintained by the Debtors’ claim agent, Prime Clerk, at http://www.cases.primeclerk.com/JCPenney.
