Wells Fargo provided an ABL facility and Pathlight Capital provided a FILO facility for a total of $1.5 billion in financing for JCPenney after the company sold its retail and operating assets to Simon Property Group and Brookfield Asset Management to exit Chapter 11.
JCPenney’s asset purchase agreement with Simon, Brookfield and the company’s DIP and first lien lenders, supported by the unsecured creditors committee, had previously been approved by the U.S. Bankruptcy Court for the Southern District of Texas.
“We are pleased to lead such an important financing for this iconic American retailer to not only support our long-term client through their reorganization, but also provide Simon Property Group and Brookfield Asset Management the financial flexibility they need as they transition JCPenney into its next phase,” David Marks, head of Wells Fargo Commercial Capital, said.
“Pathlight is pleased to support JCPenney through their emergence and future growth,” Dan Platt, CEO at Pathlight Capital, said. “We are looking forward to working with the management team and new equity partners as they continue to implement their transformation strategy and focus on enhancing the shopping experience of their loyal customer base.”
“Today is an exciting day for our company, as we have accomplished our goal of putting JCPenney on a secure path for the future as a private company so that we can continue to serve our loyal customers,” Jill Soltau, CEO of JCPenney, said. “With this closing, our operating company has exited Chapter 11 and is continuing under new ownership and the JCPenney banner. This milestone would not be possible without the commitment and hard work of our associates and the support of our vendor partners. Throughout the 2020 holiday season and beyond, we remain focused on implementing our plan for renewal to offer compelling merchandise, drive traffic, deliver an engaging experience, fuel growth and build a results-minded culture.”
“We have always been firm believers in JCPenney and are very pleased to help preserve this iconic institution and save tens of thousands of jobs,” David Simon, chairman, CEO and president of Simon Property Group, said. “JCPenney is now poised for a future focused on innovation and consumers while continuing to navigate through the pandemic. We are excited about JCPenney’s future growth and look forward to collaborating with the JCPenney team to serve its customers and communities.”
“We are excited to help lead the turnaround of a storied institution while saving tens of thousands of jobs and continuing to serve over 35 million customers,” Brian Kingston, CEO of real estate at Brookfield Asset Management, said. “This is exactly the type of investment our Retail Revitalization Program was designed to make and along with our partner Simon we have a successful blueprint in place to deploy our collective operational expertise and industry relationships to transform JCPenney through new innovations and offerings.”
The court approved the JCPenney’s plan of reorganization to create separate property holding companies comprising 160 of the company’s real estate assets and all of its owned distribution centers, which will be owned by the company’s DIP and first lien lenders. The OpCo will enter into master leases with the PropCos and JCPenney will continue to operate the properties and distribution centers moved into the PropCos. The PropCos are expected to complete the court-supervised restructuring process and emerge from Chapter 11 bankruptcy protection in the first half of 2021.
Kirkland & Ellis is serving as legal adviser, Lazard is serving as financial adviser and AlixPartners is serving as restructuring adviser to JCPenney.
Paul, Weiss, Rifkind, Wharton & Garrison is serving as legal counsel and BRG Capital Advisors is serving as financial adviser to Simon and Brookfield.