Brookfield Property Partners L.P. (NasdaqGS:BPY) and Simon Property Group, Inc. (NYSE:SPG) entered into letter of intent to acquire all of retail and operating assets of J. C. Penney Company, Inc. (OTCPK:JCPN.Q) for $800 million on September 9, 2020. Brookfield Property Partners L.P. and Simon Property Group, Inc. reached an agreement to acquire substantially all the retail and operating assets of J. C. Penney Company, Inc. for $1.2 billion on October 20, 2020. As per the terms, Simon and Brookfield will pay about $692 million in cash, plus 50% of the amount (if any) by which Estimated October EBITDA exceeds the Target October EBITDA, less 50% of the amount (if any) by which Target October EBITDA exceeds Estimated October EBITDA and will assume $500 million liabilities for the acquisition. Brookfield Property and Simon also deposited a $30 million as provision. The total transaction contemplates a $1.75 billion total enterprise. J.C. Penney will establish a real estate investment trust and a property holding company owning 161 J.C. Penney stores and distribution centers. These entities will be owned by J.C. Penney's first-lien lenders, which will rent the locations to the operating company owned by Simon and Brookfield. On closing J. C. Penney's operating assets will conduct business outside of the Chapter 11 process under the J.C. Penney banner with Simon and Brookfield as its owners. J. C. Penney will also receive a $2 billion secured financing package from Wells Fargo. J.C. Penney intends to file a motion seeking authorization from the U.S. Bankruptcy Court to conduct an auction with Brookfield, Simon and the first lien lenders serving as the stalking horse bidders. Under the terms of termination, Brookfield Property Partners and Simon Property Group will receive $9 million as termination fee to J. C. Penney Company.

The transaction is expected to save 70,000 jobs and 650 stores of J. C. Penney. J. C. Penney will seek approval from Bankruptcy Court in early October 2020. The transaction is subject to definitive documentation that must be agreed upon by all parties, the waiting period (and any extension thereof), or any necessary approval, as applicable, related to such Transaction under the HSR Act or under the Foreign Competition Laws having been terminated, the Bankruptcy Court shall have entered the Sale Order and other closing conditions. The transaction has been filed for approval in the EU. The parties approached the European Commission on October 5. The regulator has set November 10 as a provisional deadline for a ruling. As of October 22, 2020, Federal Trade Commission granted an early termination notice of antitrust approval waiting period. As of October 28, 2020, the transaction got approval from the European Commission. As of November 9, 2020, Chief Judge David R. Jones of the U.S. Bankruptcy Court for the Southern District of Texas has approved the transaction. As of November 10, 2020, the transaction remains subject to additional closing conditions. The closing is expected to occur on October 31, 2020. As per October 21, 2020, if court approval is received and the closing conditions in the asset purchase agreement are met, it is expected that the transaction will close in advance of the December 2020 holiday season. As of November 3, 2020, the closing of the transaction is expected to occur on or before November 20, 2020. As of November 9, 2020, the transaction is expected to close in late November 2020.

Joshua A. Sussberg, Christopher J. Marcus, Tana Ryan, Steve Toth, Aisha Lavinier, Aparna Yenamandra and Justin C. Elliott of Kirkland & Ellis LLP acted as legal advisors and Lazard acted as financial advisor to J. C. Penney. AlixPartners LLP is serving as restructuring adviser to the company. Edward T. Ackerman, Brian S. Hermann, Andrew M. Parlen and Robert B. Schumer of Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel to Brookfield and Simon. Otterbourg P.C., as counsel to the administrative agent for the Brookfield Property Partners and Simon Property Group's prepetition revolving credit facility. Milbank LLP, as counsel to the First Lien Group of certain first lien creditors; Cooley LLP, as co-counsel to the Committee; Michael D. Sirota, Seth Van Aalten and Justin R. Alberto of Cole Schotz P.C., as co-counsel to the creditors committee. BRG Capital Advisors, LLC is serving as financial adviser to Simon and Brookfield.

Brookfield Property Partners L.P. (NasdaqGS:BPY) and Simon Property Group, Inc. (NYSE:SPG) completed the acquisition of all of retail and operating assets of J. C. Penney Company, Inc. (OTCPK:JCPN.Q) on December 7, 2020. Under the deal, Simon and Brookfield will invest $300 million in equity as part of what he said is more than $1.6 billion paid for the retailer's operations. The valuation also includes a $300 million first-in, last-out exit loan, a $520 million note for the first-lien lenders and a draw on an asset-backed loan. Wells Fargo Bank NA leads a syndicate of lenders providing the new operating company with a $2 billion ABL exit loan. First-lien lenders will credit-bid $1 billion for ownership of 160 stores and six distribution centers, which will be leased to the operating company under a master lease agreement. Under J.C. Penney's reorganization plan, they also are set to receive the $520 million note and an estimated $360 million in cash. Similarly, the official committee of unsecured creditors on Sunday settled with the debtor, majority lenders, Simon and Brookfield. Under the settlement, second-lien noteholders owed $405.77 million will receive $1.5 million and unsecured noteholders owed $1.35 billion will receive $750,000. General unsecured creditors also could receive funds from an earnout agreement. Payment for the groups under the retailer's Chapter 11 plan had depended on satisfaction in full of $1.57 billion in first-lien claims. J.C. Penney anticipates that there will be no proceeds from sale available for distribution to the company's common stockholders. In connection with the consummation of the sale and pursuant to the Asset Purchase Agreement, the parties entered into a triple-net master lease. Additionally, the parties entered into a Transition Services Agreement. In connection with the consummation of the sale, Jill Soltau resigned from the Board, and the following named executive officers of to J. C. Penney resigned from their respective positions with the company: Brynn Evanson, Executive Vice President, Chief Human Resources Officer, and Michelle Wlazlo, Executive Vice President, Chief Merchandising Officer. Deutsche Bank Securities Inc. acted as financial advisor to J. C. Penney Company, Inc. Matthew D. Cavenaugh, Jennifer F. Wertz and Kristhy M. Peguero of Jackson Walker LLP are debtor counsel. Dennis F. Dunne, Andrew M. Leblanc and Aaron L. Renenger of Milbank LLP and John F. Higgins of Porter Hedges LLP represent the majority lenders. Marty L. Brimmage Jr., Lacy M. Lawrence, Ira S. Dizengoff, Philip C. Dublin and Brad Kahn of Akin Gump Strauss Hauer & Feld LLP are counsel to the minority lender group. Jay R. Indyke and Cathy Hershcopf of Cooley LLP represent the creditors' committee. Matthew S. Okin and David L. Curry Jr. of Okin & Adams LLP are counsel to the equity committee. A minority lender group that the sale on November 5, 2020, settled with J.C. Penney and the majority lender group, agreeing to accept a $40 million supplemental distribution as well as $6 million to satisfy fees and expenses of its advisers.