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") that held approximately 70 percent
of the Debtors' first lien debt as of such date.
On September 10, 2020, the Company entered into a non-binding letter-of-intent
("LOI") with the Ad Hoc Group, Simon Property Group ("Simon") and Brookfield
Property Group ("Brookfield") 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.
Consequently, there can be no assurance that the existing LOI will ultimately
result in a final, approved sale or plan of reorganization. In connection with
the LOI, the Company received a form of Asset Purchase Agreement Term Sheet and
Credit Bid Term Sheet from the Ad Hoc Group summarizing the terms of the Ad Hoc
Group's credit bid (collectively, the "Term Sheets"). The Company has
acknowledged receipt of the Term Sheets and has agreed to support the credit bid
summarized in the Term Sheets. The Term Sheets have not been executed by any
party, are not binding, do not reflect any input from Simon or Brookfield and
have not been reviewed by or agreed to by Simon or Brookfield. In addition, the
Term Sheets are expressly not part of the LOI and may contain terms that are
inconsistent with the LOI.
In connection with the filing of the Chapter 11 Cases, J. C. Penney entered into
confidentiality agreements (collectively, the "NDAs") with certain lenders,
noteholders and other creditors. 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 and the Company's
non-amortizing senior secured priming multi-draw delayed draw
debtor-in-possession term loan facility. A copy of the Cleansing Material is
attached to this Current Report on Form 8-K as Exhibit 99.1.
The Cleansing Material includes a copy of the LOI as well as the Term Sheets.
The other portions of the Cleansing Material were prepared solely to facilitate
discussions with the parties to the NDAs and 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 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.
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
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses