Item 1.01
|
Entry into a Material Definitive Agreement.
|
On June 20, 2017, J. C. Penney
Company, Inc. (the Company), J. C. Penney Corporation, Inc. (the Corporation), J. C. Penney Purchasing Corporation (Purchasing, and collectively with the Company and the Corporation, the Loan Parties),
and certain subsidiaries of the Corporation entered into Amendment No. 2 to Credit Agreement (the Amendment) to amend and restate the Corporations Existing Credit Agreement (as defined below) (the Existing Credit Agreement, as
amended and restated pursuant to the Amendment, the Amended and Restated Credit Agreement) with the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (in such capacity, the Administrative
Agent).
The Amended and Restated Credit Agreement replaces the Credit Agreement, dated as of June 20, 2014, among the Loan
Parties, the lenders party thereto, the Administrative Agent and the other parties thereto (as amended, restated, supplemented or otherwise modified prior to the date of the Amendment, the Existing Credit Agreement) and provides for an
asset-based revolving credit facility up to $2.35 billion, with a $750 million letter of credit sublimit and a $100 million swingline advance limit. As with the Existing Credit Agreement, borrowing availability under the revolving
facility will vary according to the Loan Parties levels of inventory, credit card receivables and accounts receivable (the Borrowing Base). The Amended and Restated Credit Agreement is expected to mature on June 20, 2022.
All borrowings under the Amended and Restated Credit Agreement accrue interest at a rate equal to, at the Corporations option, a base
rate or an adjusted LIBOR rate plus a spread. The proceeds of the Amended and Restated Credit Agreement may be used for working capital and general corporate purposes. As of the date hereof, there are no outstanding loans under the Existing Credit
Agreement.
As with the Existing Credit Agreement, the obligations of the Loan Parties under the Amended and Restated Credit Agreement are
guaranteed by the Loan Parties and certain of the Companys indirect wholly-owned subsidiaries that are not borrowers under the Amended and Restated Credit Agreement. The Amended and Restated Credit Agreement is secured by collateral
substantially similar to the Existing Credit Agreement pursuant to the Guarantee and Collateral Agreement dated as of June 20, 2014 among the Loan Parties, the subsidiaries of the Corporation identified therein, and the Administrative Agent.
As with the Existing Credit Agreement, the Amended and Restated Credit Agreement contains customary affirmative and negative covenants
and there are exceptions to these covenants and some are only applicable when availability falls below certain thresholds. The Amended and Restated Credit Agreement requires the Corporation to maintain, at all times, minimum excess availability of
not less than (a) $200 million in the event that 10% of the lesser of (A) the commitments under the revolving facility or (B) the Borrowing Base (such lesser amount, the Revolving Credit Line Cap), is equal to or greater
than $200 million or (b) in the event that 10% of the Revolving Credit Line Cap is less than $200 million, the greater of (A) 10% of the Revolving Credit Line Cap or (B) $150 million. The minimum excess availability covenant will
not apply if the Corporation maintains a Fixed Charge Coverage Ratio, as defined in the Amended and Restated Credit Agreement, of not less than 1.00 to 1.00 for the most recent period of four consecutive fiscal quarters ended on or prior to the
determination date. The Amended and Restated Credit Agreement also contains customary events of default for credit facilities of this type. Upon an event of default that is not cured or waived within any applicable cure periods, in addition to other
remedies that may be available to the lenders, the obligations of the Loan Parties may be accelerated, outstanding letters of credit may be required to be cash collateralized and remedies may be exercised against the collateral.
Certain of the lenders who are parties to the Amendment provide commercial banking and investment banking services to the Company.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of
the Amendment which is filed herewith as Exhibit 10.1 to this Current Report on Form
8-K
and is incorporated by reference herein.