Daily News: May 20, 2014

Wells Fargo, Others Provide J.C. Penney Revolver

J.C. Penney entered into a commitment letter with Wells Fargo Securities, Bank of America, Wells Fargo Bank, Merrill Lynch, J.P. Morgan Securities, JPMorgan Chase Bank, Barclays Bank and Goldman Sachs Bank to provide the corporation with a $2.35 billion senior secured asset-based revolving credit and term loan facility.

The proceeds of the credit facility will be used to repay or refinance all or a portion of the outstanding borrowings under the existing credit facility, to pay costs, expenses and fees in connection with the credit facility and other related transactions and for working capital and general corporate purposes. As of the date hereof, the company has outstanding loans in the amount of $650 million under the existing credit facility.

The credit facility will replace the amended and restated credit agreement, dated as of January 27, 2012. As with the existing credit facility, borrowing availability under the credit facility will vary according to the loan parties’ levels of inventory, credit card receivables and accounts receivable. The credit facility is expected to mature five years from the closing date thereof.

All borrowings under the credit facility will accrue interest at a rate equal to, at the corporation’s option, a base rate or an adjusted LIBOR rate plus a spread.

As with the existing credit facility, the credit facility will be guaranteed by the company, the corporation, J.C. Penney Purchasing and certain of the corporation’s subsidiaries. The credit facility will be secured by collateral substantially similar to the existing credit facility. Any proceeds of the ABL priority collateral will be applied first to the satisfaction of all obligations under the revolving facility and second to the satisfaction of the obligations under the term loan facility.

The commitment by the commitment parties to provide the credit facility is subject to, among other things, execution of a definitive loan agreement and other loan documentation and the satisfaction of other customary conditions precedent for financings of this type. Under the commitment letter, the corporation undertakes to indemnify the commitment parties against certain liabilities and to reimburse the commitment parties for certain fees and expenses.

Previously on abfjournal: J.C. Penney Reports First Sales Gain in Three Years, May 16, 2014