J.C. Penney (JCP) - Get Report reportedly is close to securing $450 million in funding that it will use to navigate a possible bankruptcy filing, marking what would be the third major U.S. retailer to fall victim to the coronavirus pandemic and ongoing economic shutdown.
Citing people familiar with the matter, the retailer is planning to file for bankruptcy as soon as this Friday, CNBC reported, though that timing could still be delayed. The company is considering closing 180 to 200 stores while in bankruptcy.
The funding would be smaller than the $1 billion J.C. Penney was initially seeking. As part of the discussions, the company would be able to draw $225 million of the bankruptcy loan, with the rest of the funds to be received based on how it does against its budget.
J.C. Penney announced at the end of March that it was extending the shutdown of its portfolio of 850 stores and its head office, and furloughing the majority of its hourly-wage employees. The retail chain skipped two debt payments in the last month.
Even so, that isn’t stopping the Plano, Texas retailer from accelerating millions in “performance” based compensation for a host of its senior executives.
In a regulatory filing, the company revealed a series of executive compensation payouts designed to “enable the company to retain and continue to motivate” executives and other employees “through the volatile and uncertain environment affecting the retail industry.”
Specifically, the company’s board has agreed to grant awards based on 2019 performance that were originally scheduled to pay out at the end of the 2021 fiscal year, including a $4.5 million payout to CEO Jill Soltau and $1 million payouts to Chief Financial Officer Bill Wafford, Chief Merchant Michelle Wlazlo and Chief Human Resources Officer Brynn Evanson.
As part of the bankruptcy filing, the company is in talks with investment firms KKR, Ares Management, Sixth Street Partners and Apollo Global Management for a deal in which they would take on some of the company’s debt in exchange for a controlling equity stake.
J.C. Penney would become the third major retailer to formally file for bankruptcy amid the coronavirus pandemic, following J.Crew and Neiman Marcus.
Shares of J.C. Penney were up 33.77% at 27 cents in trading on Wednesday.