Transaction Expected to Lower Annual Interest Expense by $24 Million
PLANO, Texas - (June 23, 2016) - J. C. Penney Company, Inc. (NYSE: JCP) (the "Company") today announced that its wholly-owned subsidiary, J. C. Penney Corporation, Inc. ("JCP"), has completed the refinancing of its $2.25 billion five-year senior secured term loan credit facility entered into in 2013 with an amended and restated $1.688 billion seven-year senior secured term loan credit facility, and the issuance of its previously announced $500 million of 5.875% Senior Secured Notes due 2023. The amended and restated term loan facility has a lower interest rate than the 2013 facility, representing a 75 basis point reduction and an extended maturity from 2018 to 2023. Proceeds from the amended and restated term loan facility and the senior secured notes offering will be used to repay the entire outstanding principal balance of the 2013 facility. The amended and restated term loan facility and the senior secured notes are guaranteed by the Company and certain subsidiaries of JCP, and are secured by mortgages on certain real estate of JCP and the guarantors.
As a result of this transaction, the Company expects to generate approximately $24 million in annualized interest expense savings. In the second quarter of fiscal 2016, the Company will record a one-time $34 million non-cash write-off of unamortized debt issuance costs associated with the 2013 facility.
"We were pleased with the strong demand by investors, which allowed us to both lower our interest rate and extend the maturity of our term loan," said Marvin Ellison, chief executive officer of JCPenney. "We proactively pursued a refinancing due to favorable market conditions and the ability to further enhance our financial flexibility and liquidity position. This reflects the improved performance of our Company and the market's confidence in the Company's strategic goal of achieving $1.2 billion in EBITDA by 2017."
JPMorgan Chase Bank, N.A. was the lead arranger of the amended and restated term loan facility, with Barclays Bank PLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC and Goldman Sachs Lending Partners LLC, serving as the other joint arrangers.
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J. C. Penney Company, Inc. (NYSE:JCP), one of the nation's largest apparel and home furnishings retailers, is on a mission to ensure every shopping experience is worth the customer's time, money and effort. Whether shopping jcp.com or visiting one of over 1,000 store locations across the United States and Puerto Rico, customers will discover a broad assortment of products from a leading portfolio of private, exclusive and national brands. Supporting this value proposition is the warrior spirit of over 100,000 JCPenney associates worldwide, who are focused on the Company's three strategic priorities of strengthening private brands, becoming a world-class omnichannel retailer and increasing revenue per customer. For additional information, please visit jcp.com
Investors and others should note that the Company announces material information using SEC filings, press releases, public conference calls and webcasts. In the future, JCPenney will continue to use these channels to distribute material information about the Company and may also utilize its website and/or various social media to communicate important information about the Company, key personnel, new brands and services, trends, new marketing campaigns, corporate initiatives and other matters. Information that the Company posts on its website or on social media channels could be deemed material; therefore, investors, the media, customers, business partners and others interested in the Company are encouraged to review the information posted on its website as well as the following social media channels:
Facebook (https://www.facebook.com/jcp) and Twitter (https://twitter.com/jcpnews).
Any updates to the list of social media channels used to communicate material information will be posted on the Investor Relations page of the Company's website at www.jcpenney.com
This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expect" and similar expressions identify forward-looking statements, which include, but are not limited to, statements regarding earnings, interest expense and the use of proceeds from the offering and the amended and restated term loan facility. Forward-looking statements are based only on the Company's current assumptions and views of future events and financial performance. They are subject to known and unknown risks and uncertainties, many of which are outside of the Company's control that may cause the Company's actual results to be materially different from planned or expected results. Those risks and uncertainties include, but are not limited to, general economic conditions, including inflation, recession, unemployment levels, consumer confidence and spending patterns, credit availability and debt levels, changes in store traffic trends, the cost of goods, more stringent or costly payment terms and/or the decision by a significant number of vendors not to sell us merchandise on a timely basis or at all, trade restrictions, the ability to monetize non-core assets on acceptable terms, the ability to implement our strategic plan including our omnichannel initiatives, customer acceptance of our strategies, our ability to attract, motivate and retain key executives and other associates, the impact of cost reduction initiatives, our ability to generate or maintain liquidity, implementation of new systems and platforms including EMV chip technology, changes in tariff, freight and shipping rates, changes in the cost of fuel and other energy and transportation costs, disruptions and congestion at ports through which we import goods, increases in wage and benefit costs, competition and retail industry consolidations, interest rate fluctuations, dollar and other currency valuations, the impact of weather conditions, risks associated with war, an act of terrorism or pandemic, the ability of the federal government to fund and conduct its operations, a systems failure and/or security breach that results in the theft, transfer or unauthorized disclosure of customer, employee or Company information, legal and regulatory proceedings and the Company's ability to access the debt or equity markets on favorable terms or at all. There can be no assurances that the Company will achieve expected results, and actual results may be materially less than expectations. Please refer to the Company's most recent Form 10-K for a further discussion of risks and uncertainties. Investors should take such risks into account and should not rely on forward-looking statements when making investment decisions. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We do not undertake to update these forward-looking statements as of any future date.