J.C. Penney Plans $500 Million Loan to Refinance RevolverSridhar Natarajan
J.C. Penney Co., the retailer that saw its first sales gain in three years last quarter, is marketing a $500 million term loan as part of a $2.35 billion financing, according to a person with knowledge of the deal.
The debt will be used to refinance an asset-backed revolving credit line, according to the person, who asked not to be identified without authorization to speak publicly. Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Barclays Plc and Goldman Sachs Group Inc. are arranging the loan, which is due in 2019, the person said. A lender meeting is scheduled for June 5 at 9 a.m. in New York.
The century-old department-store chain, which has $5.5 billion of total debt, reported a 6.3 percent first-quarter revenue increase on May 16, reversing a string of sales declines that stretched back to 2011. A successful refinancing of its $1.85 billion credit facility will leave J.C. Penney with less than $500 million of debt coming due before the end of 2016.
The Plano, Texas-based company has drawn $650 million from the revolver, which comes due in April 2016, according to data compiled by Bloomberg. J.C. Penney obtained a commitment from the banks for an asset-based revolving credit and term loan facility totaling $2.35 billion, according to a May 19 regulatory filing.
The chain pays interest at 3 percentage points more than the London interbank offered rate on the revolver, Bloomberg data show.