Unlike Texas-based Stages Stores and Pier One, two iconic department store chains based in the Dallas area of North Texas will survive their recent bankruptcy filings.
JC Penney said late Wednesday (Sept. 10) mall owners Simon Property Group and Brookfield Property Managers had reached a deal to acquire the troubled retailer. The deal, first reported by the Wall Street Journal, is valued at about $800 million. Analysts said the plan would help the retailer keep the majority of its 650 stores open. Offers by other suitors like competitor Belk would have closed most of the Penney locations.
The deal with the mall giants calls for each player to ante up about $300 million in cash and assume $500 million in debt and own roughly 490 stores. A group of other lenders will own 160 Penney locations along with the company’s distributions centers in return for their forgiveness of roughly $5 billion in debt by Penney. Penney said it plans to seek approval from the bankruptcy judge for this deal early next month. Until then, the transition is still subject to competing bids.
Wells Fargo said it would lend Penney $2 billion in revolving credit once the transaction is completed.
Dallas-based retailer Neiman Marcus received court approval of its Chapter 11 reorganization plan which gives the luxury department store chain a way to restructure its debt load and provide additional funding allowing an exit from bankruptcy. The plan will eliminate more than $4 billion of Neiman’s nearly $5.5 billion in existing debt and $200 million in interest expense while leaving no near-term maturities.
Neiman, like Penney, filed bankruptcy in May. Neiman said with the plan confirmed, the company intends to emerge from bankruptcy by Sept. 30, once all conditions have been finalized, with the full support of its creditors and new equity shareholders.