Sycamore Partners could potentially acquire J.C. Penney

Sycamore partners, a private equity firm, is in preliminary talks to acquire J.C. Penney Co Inc out of bankruptcy. The news was reported by Reuters. J.C. Penney is currently in negotiations with creditors, but should these negotiations fail acquisition by Sycamore is an option.

In May, J.C. Penney filed for bankruptcy protection after the company had been seeing ongoing financial struggles, and the coronavirus pandemic shut down their network of stores killing the bread-and-butter of their revenue. Sycamore is still deciding whether to completely acquire J.C. Penney or make an investment in the retailer. Any deal would require bankruptcy judge approval.

J.C. Penney is also in talks with its landlords including Brookfield Asset Management and Simon Property Group about a potential deal. It is possible that Brookfield, Sycamore, and Simon could get a joint deal for J.C. Penney. None of the parties involved immediately responded to request for comment.

J.C. Penney currently has 5 billion dollars in debt that they are trying to reduce. J.C. Penney is first pursuing reorganization efforts that are subject to lender approval. If J.C. Penney fails to get majority lender approval then they will have to pursue a sale.

J.C. Penney is currently permanently shutting some stores as part of their restructuring plan and to cut costs. In a court hearing on Thursday, U.S. bankruptcy court judge David Jones approved of financing from senior lenders to keep J.C. Penney operational as they work on exiting bankruptcy.

There is also a plan looking at splitting J.C. Penney into two companies, one would be responsible for J.C. Penney's real estate holdings and the other would be responsible for the actual retail business.

So far, J.C. Penney has reopened 500 stores in a post-pandemic world. The retailer is currently seeking permission to skip June, July, and August rent payments to help cut costs.

photo: via J.C. Penney Newsroom