J. C. Penney Company Inc. has reached an agreement with some lenders on its business plan, it revealed it a Securities and Exchange Commission filing on Monday.
So long as certain conditions are satisfied, the Plano, Texas-based company has an agreement with its required consenting first-lien lenders on its business plan. JCPenney said that the parties had agreed upon “various milestone changes” similar to those set forth in its debtor-in-possession financing agreement but did not specify beyond that.
Its business plan has not been made public but was shared with creditors, lenders and prospective investors on July 8, meeting a deadline. The company was initially required to get approval for the plan by July 14. However, a judge for Texas bankruptcy court has granted the retailer an extension to July 31 as it continues to negotiate with lenders and prospective investors.
After struggling for several years amid declining sales, numerous leadership changes and increased digital competition, JCPenney filed for Chapter 11 bankruptcy protection on May 15, obtaining $900 million in debtor-in-possession financing to aid operations. At the end of June, the retailer had about $980 million in cash on hand, besting its projected budget by around $100 million. It expects to close 242 doors, or about 29% of its fleet, by February and has begun liquidation sales this summer at more than 150 stores. In addition, JCPenney announced last week that it would let go of approximately 1,000 workers.
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Like other retailers, JCPenney was hit hard by the coronavirus crisis — which forced it to temporarily shutter its entire fleet. With doors shut, the company furloughed scores of workers and took other actions in hopes of maintaining its financial flexibility, including tapping roughly $1.25 billion from its $2.35 billion revolving credit line. Before the pandemic hit, JCPenney had taken a number of steps with the aim of turning things around. It hired restructuring advisers in 2019, as well as experimented with new strategies including tapping into the outdoor and consignment markets and launching a curbside pickup program. Despite these measures, investors had largely lost faith in the retailer, sending its stock below $1 and putting it at risk of being delisted from the New York Stock Exchange.