Mall Owners Set Up $800M Deal To Save JCPenney
The deal could be for $800 million and would avoid a total liquidation. It would save around 70,000 jobs and 650 stores, according to Joshua Sussberg of the law firm Kirkland & Ellis, per CNBC.
The payment will be broken down into around $300 million in cash and $500 million in debt, according to Sussberg at a court hearing, CNBC reported.
JCPenney could also receive help from Wells Fargo, which agreed to give $2 billion in revolving credit once the deal is completed, according to the report. That would leave the former retail giant with $1 billion in cash. JCPenney is planning to ask a bankruptcy judge to get the deal approved early in October.
The hedge funds and private equity firms that have been financing the retailer’s bankruptcy will take ownership of some stores and the company’s distribution centers in return for forgiving JCPenney’s $5 billion debt, CNBC reported.
The talks to rescue the retail giant have been ongoing for weeks in what U.S. Bankruptcy Court Judge David Jones has called a case of egos getting in the way of a resolution, according to CNBC. Sussberg said there had been “a few screaming matches.”
The Simon and Brookfield deal still has to receive court approval and favor over any competing bids, CNBC reported.
JCPenney has faced the same struggles as other large brick-and-mortar retailers in the eCommerce age, with sales dwindling while consumers flock more to the internet to shop, a trend that has only been expedited during the pandemic.