J.C. Penney Company filed a draft asset purchase agreement, which tracks the terms of the previously announced letter of intent, to sell JCPenney. All parties are working to conclude negotiations and intend to utilize the ongoing mediation process to achieve that goal.

The key terms of the draft APA are:

  • Brookfield Asset Management and Simon Property Group will acquire substantially all of JCPenney’s retail and operating assets (OpCo) through a combination of cash and new term loan debt.
  • The formation of separate property holding companies (PropCos), comprising 160 of the company’s real estate assets and all of its owned distribution centers, which will be owned by the company’s debtor-in-possession and first lien lenders.
  • The OpCo and PropCos will enter into a master lease with respect to the properties and distribution centers moved into the PropCos.

“This is another important milestone in our restructuring plan, bringing us one step closer to finalizing the APA, closing the sale process and exiting Chapter 11 ahead of the December 2020 holiday season,” Jill Soltau, CEO of JCPenney, said. “Our talented team is focused on working with Brookfield and Simon to build on our over 100-year history of serving customers and working seamlessly with our vendor partners. We look forward to completing this sale and continuing our progress implementing our plan for renewal to offer compelling merchandise, drive traffic, deliver an engaging experience, fuel growth and build a results-minded culture.”

Kirkland & Ellis is serving as legal adviser, Lazard is serving as financial adviser and AlixPartners is serving as restructuring adviser to J.C. Penney Company.

Paul, Weiss, Rifkind, Wharton & Garrison is serving as legal counsel to Brookfield and Simon.