A judge approved Simon Property Group and Brookfield Asset Management on Monday Nov. 9 to buy JC Penny for $1.75 billion. It is estimated that the sale will save 60,000+ jobs that would have been lost if the brand had liquidated. The deal is set to close November 20.
The brand has already closed 7 locations, with at least another 153 locations slated for closure. This is, however, a win as the sale preserves over 600 of the 800 locations the brand operated at the time of their bankruptcy filing.
CEO Jill Soltau is quoted as saying, "Our goal from the beginning of this process has been to ensure J.C. Penney will continue to serve customers for decades to come and this court approval accomplishes that objective."
Under this new deal, JC Penny is essentially split into 2 entities. Simon Property Group and Brookfield Asset Management will control retail and operations, while the company’s creditors will keep control of distribution centers and real estate holdings. Specifically the acquisition includes:
- Simon and Brookfield investing $300 million to secure the majority of stores and operations.
- Simon and Brookfield assuming $500 million in J.C. Penney debt.
- A $2 billion secured financing package from Wells Fargo.
- Establishing a real estate investment trust and a property holding company owned by J.C. Penney's first-lien lenders, retaining 161 J.C. Penney stores and distribution centers.
- JC Penny will be left with approximately $1 Billion in cash to continue operations
With this sale, the JC Penny brand is that much closer to exiting bankruptcy. Saltou said that this move will put the department store in "a strong position to build on J.C. Penney's long track record of taking care of our associates, customers, vendor partners and communities."
Still, at least ⅓ of JC Penny locations will be shutting their doors by the end of 2021. Do you have a JC Penny in your shopping center? Are you worried your location is on the chopping block? Let Retailsphere help you look for viable retailers to backfill a potential vacancy. Sign up for a no-obligation demo today.