NEW YORK, United States — J.C. Penney Co. has formalised a planned sale to its bankruptcy lenders and biggest landlords, but must first finalise a staggering lease agreement in less than a week to close the deal.
The retailer on Tuesday filed a draft purchase agreement detailing a plan to sell itself to mall owners Simon Property Group Inc., Brookfield Property Partners and its senior lenders. But the parties have until Monday to finalise a master lease agreement between the mall landlords and the lenders who will own most of the retailer’s real estate, Josh Sussberg of Kirkland & Ellis said in a court hearing on behalf of J.C. Penney.
It’ll be a sprint to wrap up “what I assume to be one of the longest and most complex lease agreements known to mankind,” said Judge David Jones, who is presiding over the case. A lawyer for J.C. Penney’s biggest lenders echoed the sentiment, saying it’s “beyond the most complex document I’ve ever seen” and has “so many open issues.”
J.C. Penney is also facing a competing sale proposal from a smaller group of lenders including Aurelius Capital Management. That group has obtained financing commitments for a similarly structured deal at a “much higher and much better” price, Phil Dublin of Akin Gump Strauss Hauer & Feld said on behalf of the lenders.
The current purchase agreement follows an arduous sale process that included marathon mediation sessions last weekend, Sussberg said, adding the parties agreed to the structure of the deal just after 6 a.m. Tuesday. Sussberg said he’s “highly confident” that “J.C. Penney’s future is secure.”
The sale may save more than 60,000 jobs at the retailer, according to court papers.
By Jeremy Hill