NEW YORK – Mall owners Simon Property Group and Brookfield Property Partners are close to a deal to buy department store chain Jessie Penney and keep the chain operational.
Penny’s lawyer Josh Sausberg announced the temporary settlement, which would save about 70,000 jobs and survive liquidation during a brief hearing Wednesday in bankruptcy court.
There will be an enterprise value of $ 1.75 billion, including $ 300 million in cash from two landowners and $ 500 million in new debt.
He mentioned that a letter of intent with more details of the agreement would be filed with the bankruptcy court the next day. Penny will be left with $ 1 billion in cash after the deal is completed.
“We are all committed to moving this quickly and saving Jessie Penny,” Sausberg said during the court hearing.
The 118-year-old department store located in Plano, Texas, filed for Chapter 11 bankruptcy protection in mid-May, one of the largest retailers to do so, as the epidemic temporarily closed non-urgent stores nationwide. is. As part of its bankruptcy reorganization, Penny said it planned to permanently close about a third of its 846 stores over the next two years. This would leave it with just over 600 locations.
More than 40 retailers have filed for Chapter 11 bankruptcy this year, including more than two dozen retailers since the outbreak of coronaviruses. The hardest hit has been the department stores, which were already struggling to respond to changes in shoppers’ online shopping.
The temporary agreement between the two big landlords and the pennies is the latest example of mall owners increasing their desire to buy tenants affected by their epidemic. Mall owners are facing major challenges as stores are closed or unable to pay rent. The exit or closing of retailers also begins a clause, which will allow other tenants to reduce their rent without breaking their leases or facing penalties.
In fact, licensing company Authentic Brands Group and a retail venture owned by Simon last month agreed to buy 200 million old clothier Brooks Brothers for $ 325 million.
Nor Simon SPG,
Nor Brookfield BPY,
Responded to requests for comment regarding a temporary deal with Penny.