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Brookfield, Simon To Acquire JCPenney

J.C. Penney Company Inc. said it reached an agreement in principle to sell JCPenney through a court-supervised sale process.

The company has planned to seek approval of a disclosure statement and, ultimately, confirmation of a plan of reorganization in parallel with the sale process. Related to the sale process, JCPenney expects to execute a "stalking horse" asset purchase agreement or APA.

The company further noted that the APA would track an executed letter of intent, outlining the following:

* Brookfield Property Group and Simon Property Group intend to acquire substantially all of JCPenney's retail and operating assets or OpCo for $1.75 billion, which includes a combination of cash and new term loan debt.

* The agreement contemplates the formation of a separate real estate investment trust and a property holding company or PropCos, which would include 161 of the company's real estate assets and all of its owned distribution centers. The PropCos would be owned by the company's Ad Hoc Group of First Lien Lenders.

* The OpCo and PropCos would enter into a master lease with respect to the properties and distribution centers moved into the PropCos.

J.C. Penney Co. Inc. filed for Chapter 11 bankruptcy protection in May citing the impact of unprecedented coronavirus or COVID-19 pandemic on its business.

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