J. C. Penney Company, Inc. : JCPENNEY DECLARES PURPORTED NOTICE OF DEFAULT ON
CERTAIN BONDS IS INVALID; Company Seeks Injunctive and Declaratory Relief in
Delaware Chancery Court
PLANO, Texas (Feb. 4, 2013) - J. C. Penney Company, Inc. ("jcpenney")
(NYSE:JCP) announced today that it received a letter dated January 29, 2013
from Brown Rudnick LLP claiming to represent holders of more than 50% of the
Company's 7.4% Debentures due 2037. The letter purports to be a Notice of
Default under the Indenture for these Debentures dated April 1, 1994 between
J. C. Penney Company, Inc. and U. S. Bank National Association as trustee. The
Company strongly believes the Notice of Default is invalid and utterly without
Brown Rudnick LLP alleges that the Company violated the Indenture by entering
into an inventory-secured Credit Agreement in January 2012 without providing
for equal and ratable security for the Debenture holders. However, the
granting of a security interest in inventory pursuant to the Credit Agreement
does not constitute an event of default under the Indenture. Pursuant to the
Indenture, the negative covenant extends only to "principal property" -- which
does not include inventory. Furthermore, the Company has never had any loans
outstanding under the Credit Agreement, and because the Indenture only covers
"indebtedness for money borrowed," the Company's entry into the Credit
Agreement would not have triggered the Indenture provision in any case. The
Company has publicly disclosed for some 10 years that it has had various
undrawn credit facilities secured by inventory with no bondholder allegations
of violation of the Indenture.
The Company today filed an action for injunctive and declaratory relief in
support of its position in the Court of Chancery of the State of Delaware.
The action seeks an order enjoining the trustee from declaring an event of
default as well as an order declaring that the Company is not in default of
the Indenture governing the Debentures.
Ken Hannah, chief financial officer of jcpenney said, "We believe this notice
of default is invalid, completely without merit and is intended to create
self-interested trading opportunities in the market, and we will therefore
vigorously defend the interests of jcpenney and all of our constituencies in
all appropriate forums."
For further information, contact:
Investor Relations; (972) 431.5500
Public Relations; (972) 431.3400
More than a century ago, James Cash Penney founded his company on the
principle of the Golden Rule: treat others the way you'd like to be treated -
Fair and Square. His legacy continues to this day, as J. C. Penney Company,
Inc. (NYSE: JCP) boldly transforms the retail experience across 1,100 stores
and jcp.com to become America's favorite store. Focused on making the customer
experience better every day, jcpenney is dreaming up new ways to make
customers love shopping again. On every visit, customers will discover great
prices every day in a unique Shops environment that features exceptionally
curated merchandise, a dynamic presentation and unmatched customer service.
For more information, visit us at jcp.com.
This release may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements, which reflect the Company's current views of future events and
financial performance, involve known and unknown risks and uncertainties 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, risks and uncertainties relating to the outcome of any litigation
relating to the issue, the Company's defense, the final interpretation of the
Indenture and the Company's ability to cure any default deemed to have
occurred under the Indenture. Investors should take such risks into account
when making investment decisions. We do not undertake to update these
forward-looking statements as of any future date.
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applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
information contained therein.
Source: J. C. Penney Company, Inc. via Thomson Reuters ONE
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