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”).
Also as previously reported, 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 parties to the LOI have been, and continue to be, in discussions regarding the transactions contemplated by the LOI.
On October 20, 2020, the Company will file with the Bankruptcy Court a draft asset purchase agreement (the “draft APA”), which was prepared with the other parties to the LOI and which generally tracks the terms of the LOI, to sell substantially all of the Company Parties’ assets. The Company and the other parties to the LOI are working to conclude negotiations and enter into a final asset purchase agreement. Key terms of the draft APA are as follows: (i) Simon and Brookfield will acquire substantially all of the Company Parties’ retail and operating assets (“OpCo”) through a combination of cash and new term loan debt; (ii) separate newly-formed property holding companies (“PropCo”), to be owned by the lenders under the Company’s Superpriority Senior Secured Debtor-In-Possession Credit and Guaranty Agreement and the other holders of the Debtors’ first lien debt, will be formed and will hold 160 of the Company Parties’ real estate assets and all of their owned distribution centers; and (iii) OpCo and PropCo will enter into master leases with respect to the properties and distribution centers moved into PropCo. A copy of the draft APA will be available at a website maintained by the Debtors’ claim agent, Prime Clerk, at http://www.cases.primeclerk.com/JCPenney. The draft APA 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.
To facilitate discussions with the Ad Hoc Group during the negotiations relating to the draft APA, and in connection with discussions with certain other lenders, noteholders and other creditors, the Company provided such persons with certain non-public information subject to confidentiality agreements (collectively, the “NDAs”). 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. A copy of the Cleansing Material is attached to this Current Report on Form 8-K as Exhibit 99.1.
The Cleansing Material 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.
Cautionary Statement Regarding Forward-Looking Information
The Company has included statements in this Current Report on Form 8-K that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expect” and similar expressions identify forward-looking statements. Forward-looking statements are based only on the Company’s current assumptions and views of future events and financial performance. They are subject to
