SHAREHOLDER UPDATE
Today, the Debtors filed their motion to approve the anticipated sale transaction (“Sale”) along with a proposed chapter 11 plan and related disclosure statement (“Plan”). The Sale and Plan documents are being reviewed by Okin Adams and CR3 and the AHEC will provide a more substantive report at a later date. We understand that many of you may have questions regarding the Plan and Plan approval process. To the extent that you have questions or concerns that are general and relate to shareholders as a group, please submit your questions to Okin Adams at JCPenneyShareholders@okinadams.com. Subject to the limitations set forth in the Information Protocol, we will endeavor to address such questions and concerns through subsequent AHEC updates. (Note, however, the AHEC Professionals represent the AHEC as a body, not individual shareholders. To the extent that you have questions regarding your individual rights, you should retain separate counsel to advise regarding those issues. )
For now, however, the most significant aspect of the Plan is that the Debtors are proposing to extinguish all existing shares and will provide zero recovery to shareholders. The AHEC continues to assert that a reorganization transaction would provide greater value for all stakeholders, including shareholders, and is opposed to the Sale. As such, we intend to file and prosecute an objection to the Sale motion.
Sincerely,
Niko Celentano
Chairman
JCP Ad Hoc Equity Committee
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JCPenney Files Draft Asset Purchase Agreement
Download as PDFOctober 20, 2020
Continues to Make Significant Progress Toward Final Asset Purchase Agreement with Brookfield, Simon and First Lien Lenders
Expects to Close Sale of OpCo and Operate Outside Chapter 11 in Advance of December 2020 Holiday Season
PLANO, Texas--(BUSINESS WIRE)-- J. C. Penney Company, Inc. (OTCMKTS: JCPNQ) today announced that it has filed a draft asset purchase agreement (“APA”), 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 help achieve that goal. Key terms of the draft APA are as follows:
Brookfield Asset Management, Inc (“Brookfield”) and Simon Property Group (“Simon”) 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 (“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,” said Jill Soltau, chief executive officer of JCPenney. “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.”
Once finalized, the OpCo transaction will be subject to Court approval and other closing conditions. A hearing to seek Court approval for the transaction is expected to be scheduled for early November 2020. If Court approval is received and the closing conditions in the APA are met, it is expected that the OpCo sale will close in advance of the December 2020 holiday season. JCPenney’s operating assets will then conduct business outside of the Chapter 11 process under the JCPenney banner with Simon and Brookfield as its owners. The First Lien Lenders are expected to acquire ownership of the PropCos through the Company’s Plan of Reorganization, which will be completed following the closing of the OpCo transaction.
