The U.S. Bankruptcy Court for the Southern District of Texas authorized JCPenney to access its debtor-in-possession financing, which includes $450 million of new money from its existing first lien lenders. JCPenney previously received approval to access and use its approximately $500 million in cash collateral. Under the terms of the DIP agreement, JCPenney has access to up to $225 million immediately, and will have access to an additional $225 million as needed after July 15, 2020, subject to certain conditions. In addition, the company’s ad hoc crossholder group of lenders has agreed to participate in the rollup portion of the DIP in the amount of $53 million.
As previously reported, JCPenney entered into a restructuring support agreement with lenders holding approximately 70% of the company’s first lien debt to reduce the company’s outstanding indebtedness and strengthen its financial position. To implement the financial restructuring plan, the company filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. JCPenney sought authorization at its second day hearing to access $900 million in debtor-in-possession financing from its existing first lien lenders, which included $450 million of new money.
“We are pleased to have received court approval to access $450 million in new money, $225 million of which will be drawn immediately,” Jill Soltau, CEO of JCPenney, said. “This is a positive step forward that will help us execute our plan for renewal and store optimization strategy, continue working seamlessly with our vendor partners, fund our ongoing business operations and continue our focus on further developing the company’s go-forward business plan to successfully restructure JCPenney. In recent weeks, we have safely welcomed back valued customers to nearly 500 JCPenney stores, and we look forward to opening additional stores while following guidance from local and state orders. This progress would not be possible without the hard work and dedication of our associates, and we remain confident we will emerge from both Chapter 11 and this pandemic as a stronger retailer.”
Kirkland & Ellis is serving as legal advisor, Lazard is serving as financial advisor and AlixPartners is serving as restructuring advisor to JCPenney.
