Item 7.01. Regulation FD.
As previously reported, on May 15, 2020, J. C. Penney Company, Inc. ("J. C.
Penney" or the "Company") and certain of its subsidiaries (together with the
Company, the "Debtors") commenced voluntary cases under chapter 11 of title 11
of the United States Code (the "Chapter 11 Cases") in the United States
Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court").
Prior to the commencement of the Chapter 11 Cases, on May 15, 2020, the Company
and its subsidiaries (together with the Company, the "Company Parties") entered
into a Restructuring Support Agreement (together with all exhibits and schedules
thereto, and as amended to date, the "RSA") with members of an ad hoc group of
lenders and noteholders (the "Ad Hoc Group").
On September 10, 2020, the Company entered into a non-binding letter-of-intent
("LOI") with the Ad Hoc Group, Simon Property Group and Brookfield Property
Group that is generally consistent with the framework of the restructuring
process contemplated in the RSA. The LOI is non-binding and provides no
guarantee that a transaction will be completed. The terms of any potential
transaction are subject to definitive documentation that must be agreed upon by
all parties and subsequently approved by the Bankruptcy Court. The parties to
the LOI have been, and continue to be, in discussions regarding the transactions
contemplated by the LOI. To facilitate such discussions, the Company provided
members of the Ad Hoc Group with certain non-public information subject to
confidentiality agreements (collectively, the "NDAs"). Pursuant to the NDAs, the
Company agreed to publicly disclose certain information (the "Cleansing
Material") upon the occurrence of certain events set forth in the NDAs. A copy
of the Cleansing Material is attached to this Current Report
on Form 8-K as Exhibit 99.1.
The Cleansing Material was not prepared with a view toward public disclosure and
should not be relied upon to make an investment decision with respect to J. C.
Penney. The Cleansing Material should not be regarded as an indication that the
Company Parties or any third party consider the Cleansing Material to be a
reliable prediction of future events, and the Cleansing Material should not be
relied upon as such. The Cleansing Material includes certain values for
illustrative purposes only and such values are not the result of, and do not
represent, actual valuations, estimates, forecasts or projections of the Company
Parties or any third party and should not be relied upon as such. Neither the
Company Parties nor any third party has made or makes any representation to any
person regarding the accuracy of any Cleansing Material or undertakes any
obligation to publicly update the Cleansing Material to reflect circumstances
existing after the date when the Cleansing Material was prepared or conveyed or
to reflect the occurrence of future events, even in the event that any or all of
the assumptions underlying the Cleansing Material are shown to be in error.
The information disclosed in this Item 7.01, including Exhibit 99.1, is being
furnished and shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to the liabilities of that Section, nor shall it be deemed incorporated
by reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, regardless of any general incorporation language in such a filing.
Additional Information on the Chapter 11 Cases
Court filings and information about the Chapter 11 Cases can be found at a
website maintained by the Debtors' claim agent, Prime Clerk, at
http://www.cases.primeclerk.com/JCPenney.
Cautionary Statement Regarding Forward-Looking Information
The Company has included statements in this Current Report on Form 8-K that may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as "expect" and similar
expressions identify forward-looking statements. Forward-looking statements are
based only on the Company's current assumptions and views of future events and
financial performance. They are subject to known and unknown risks and
uncertainties, many of which are outside of the Company's control that may cause
the Company's actual results to be materially different from planned or expected
results. Those risks and uncertainties include, but are not limited to, risks
attendant to the bankruptcy process, including the Company's ability to obtain
court approval from the Bankruptcy Court with respect to motions or other
requests made to the Bankruptcy Court throughout the course of the Chapter 11
Cases; the ability of the Company to negotiate, develop, confirm and consummate
a plan of reorganization; the effects of the Chapter 11 Cases, including
increased legal and other professional costs necessary to execute the Company's
reorganization, on the Company's liquidity (including
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the availability of operating capital during the pendency of the Chapter 11
Cases), results of operations or business prospects; the effects of the Chapter
11 Cases on the interests of various constituents; the length of time that the
Company will operate under Chapter 11 protection; risks associated with
third-party motions in the Chapter 11 Cases; Bankruptcy Court rulings in the
Chapter 11 Cases and the outcome of the Chapter 11 Cases in general; conditions
to which any debtor-in-possession financing is subject and the risk that these
conditions may not be satisfied for various reasons, including for reasons
outside the Company's control; general economic conditions, including inflation,
recession, unemployment levels, consumer confidence and spending patterns,
credit availability and debt levels; changes in store traffic trends; the cost
of goods; more stringent or costly payment terms and/or the decision by a
significant number of vendors not to sell the Company merchandise on a timely
basis or at all; trade restrictions; the ability to monetize non-core assets on
acceptable terms; the ability to implement the Company's strategic plan,
including its omnichannel initiatives; customer acceptance of the Company's
strategies; the Company's ability to attract, motivate and retain key executives
and other associates; the impact of cost reduction initiatives; the Company's
ability to generate or maintain liquidity; implementation of new systems and
platforms; changes in tariff, freight and shipping rates; changes in the cost of
fuel and other energy and transportation costs; disruptions and congestion at
ports through which the Company imports goods; increases in wage and benefit
costs; competition and retail industry consolidations; interest rate
fluctuations; dollar and other currency valuations; the impact of weather
conditions; risks associated with war, an act of terrorism or pandemic; the
ability of the federal government to fund and conduct its operations; a systems
failure and/or security breach that results in the theft, transfer or
unauthorized disclosure of customer, employee or Company information; legal and
regulatory proceedings; the Company's ability to access the debt or equity
markets on favorable terms or at all; risks arising from the delisting of the
Company's common stock from the New York Stock Exchange; and the impact of
natural disasters, public health crises or other catastrophic events on the
Company's financial results, in particular as the Company manages its business
through the COVID-19 pandemic and the resulting restrictions and uncertainties
in the general economic and business environment. Please refer to the Company's
Annual Report on Form 10-K for the year ended February 1, 2020, and Quarterly
Reports on Form 10-Q filed subsequently thereto, for a further discussion of
risks and uncertainties. There can be no assurances that the Company will
achieve expected results, and actual results may be materially less than
expectations. Investors should take such risks into account and should not rely
on forward-looking statements when making investment decisions. Any
forward-looking statement made by the Company in this Current Report on
Form 8-K is based only on information currently available to it and speaks only
as of the date on which such statement is made. The Company does not undertake
to update these forward-looking statements as of any future date.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibit 99.1 Cleansing Material
Exhibit 104 Cover Page Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document
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