After weeks of haggling, a tentative real estate rescue deal for J.C. Penney came together Wednesday, which could save the iconic 118-year-old old department store chain from bankruptcy liquidation, and remove some of the threat to roughly 70,000 workers.
The complex agreement was laid out by a J.C. Penney lawyer in court -
In part one: J.C. Penney's retail operations would be acquired by Simon Property Group, the largest U.S. mall operator... and Brookfield Property Partners. That partnership plans to keep about 650 retail locations open, people familiar with the matter told Reuters ahead of court proceedings. Both mall operators are under pressure as a number of their tenants have either gone bankrupt or are holding back rent payments.
In part two: J.C. Penney's distribution centers and some locations not included in the mall owner partnership would go to a group of hedge fund and private-equity firms, according to sources close to negotiations. In return, that group would forgive some of J.C. Penney's $5 billion debt.
In addition, Wells Fargo is spearheading an effort to get J.C. Penney $2 billion in financing to exit bankruptcy, according to Wednesday's bankruptcy update hearing.
But this isn't a done deal. Talks could still fall apart and any company-saving agreement has to be approved by a bankruptcy judge. J.C. Penney plans to seek approval in early October. There's also the issue of competing bids. Sources say others are interested in buying the iconic retailer, including Saks Fifth Avenue owner Hudson's Bay.
If J.C. Penney can pull this off - it would be be the greatest retail comeback in recent memory.