Buyout firm Sycamore Partners in talks to buy troubled J.C. Penney

Debt-laden J.C. Penney is cutting jobs and closing some stores. (AFP)
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Updated 07 June 2020

Buyout firm Sycamore Partners in talks to buy troubled J.C. Penney

  • There is no certainty that the talks between Sycamore and J.C. Penney will result in a deal

NEW YORK: Private equity firm Sycamore Partners is in preliminary talks to acquire J.C. Penney Co. Inc. (JCP.N) out of bankruptcy should the US department store chain’s negotiations with its creditors fail, three people familiar with the matter said on Friday. 

J.C. Penney, which employs roughly 85,000 people, filed for bankruptcy protection in May after the coronavirus pandemic forced it to temporarily close its more than 800 stores across the US, compounding financial woes that stemmed from years of dwindling sales.

Sycamore is weighing acquiring J.C. Penney outright or making an investment in the troubled retailer, the sources said.

There is no certainty that the talks between Sycamore and J.C. Penney will result in a deal, which would require a bankruptcy judge’s approval, the sources said.

J.C. Penney is also in touch with some of its landlords, including Brookfield Asset Management Inc. (BAMa.TO) and Simon Property Group (SPG.N), about possible transactions, the sources said. Under one scenario being explored, Sycamore, Brookfield and Simon would join forces on a bid for J.C. Penney, two of the sources said. Wells Fargo & Co. (WFC.N) is also involved in the discussions, one of the sources said.

J.C. Penney shares surged 47 percent after Reuters reported on the talks, ending the day up 55 percent to close at 32 cents. 

The sources requested anonymity because the discussions are confidential. Sycamore and J.C. Penney declined to comment. Brookfield had no immediate comment, while Simon and Wells Fargo did not immediately respond to requests for comment.

J.C. Penney is in discussions about handing over control to its lenders in exchange for reducing its nearly $5 billion debt. This hinges on a slew of investment firms that hold the company’s senior debt and have provided the company’s bankruptcy financing agreeing to J.C. Penney’s business plan by July 14.

If the Texas-based company does not persuade enough lenders to approve its plan by the following day, July 15, the terms of its bankruptcy loan require J.C. Penney to abandon its reorganization efforts and pursue a sale.

It is unclear how much Sycamore is willing to pay for J.C. Penney, which is in the process of closing stores and cutting jobs.

Sycamore, a New York private equity firm that specializes in retail and consumer investments, has in the past taken control of high-profile businesses such as office supplies chain Staples, women’s clothing retailer Talbots and department-store operator Belk.

Last month, Sycamore walked away from a $525 million deal to buy a majority stake in L Brands Inc’s (LB.N) Victoria’s Secret, as the pandemic hammered sales at the lingerie chain. 

Brookfield and Simon operate malls across the US. Brookfield in May said it would devote $5 billion to non-controlling investments designed to revitalize retailers struggling in the wake of the coronavirus outbreak.

During a court hearing on Thursday, US Bankruptcy Judge David Jones approved fresh financing from senior lenders to aid J.C. Penney’s operations.


Saudi Arabia’s 6-point plan to jumpstart global economy

Updated 07 July 2020

Saudi Arabia’s 6-point plan to jumpstart global economy

  • Policy recommendations to G20 aim to counter effects of pandemic

DUBAI: Saudi Arabia, in its capacity as president of the G20 group of nations, has unveiled a six-point business plan to jump start the global economy out of the recession brought on by the COVID-19 pandemic.

Yousef Al-Benyan, the chairman of the B20 business group within the G20, told a webinar from Riyadh that the response to the pandemic -— including the injection of $5 trillion into the global economy — had been “reassuring.”

But he warned that the leading economies of the world had to continue to work together to mitigate the effects of global lockdowns and to address the possibility of a “second wave” of the disease.

“Cooperation and collaboration between governments, global governance institutions and businesses is vital for an effective and timely resolution of this multi-dimensional contagion transcending borders,” Al-Benyan said.

“The B20 is strongly of the view there is no alternative to global cooperation, collaboration and consensus to tide over a multi-dimensional and systemic crisis,” he added.

The six-point plan, contained in a special report to the G20 leadership with input from 750 global business leaders, sets out a series of policy recommendations to counter the effects of the disease which threaten to spark the deepest economic recession in nearly a century.

The document advocates policies to build health resilience, safeguard human capital, and prevent financial instability.

It also promotes measures to free up global supply chains, revive productive economic sectors, and digitize the world economy “responsibly and inclusively.”

In a media question-and-answer session to launch the report, Al-Benyan said that among the top priorities for business leaders were the search for a vaccine against the virus that has killed more than half-a-million people around the world, and the need to reopen global trade routes slammed shut by economic lockdowns.

He said that the G20 response had been speedy and proactive, especially in comparison with the global financial crisis of 2009, but he said that more needed to be done, especially to face the possibility that the disease might surge again. “Now is not the time to celebrate,” he warned.

“Multilateral institutions and mechanisms must be positively leveraged by governments to serve their societies and must be enhanced wherever necessary during and after the pandemic,” he said, highlighting the role of the World Health Organization, the UN and the International Monetary Fund, which have come under attack from some world leaders during the pandemic.

Al-Benyan said that policy responses to the pandemic had been “designed according to each country’s requirements.”

Separately, the governor of the Saudi Arabian Monetary Authority said that it was “too early” to say if the Kingdom’s economy would experience a sharp “V-shape” recovery from pandemic recession.