Sycamore Companions features $1.75B for JCPenny with strategy to expand Belks

The personal fairness company that backed out of a deal to invest in Victoria’s Key in the midst of the coronavirus pandemic appears poised to get an auction to invest in JCPenny out of bankruptcy, The Article has realized.

Large Apple-based Sycamore Partners has provided $1.75 billion to buy the 118-calendar year-previous section keep chain with options to merge it with Belks, a resource with knowledge of the condition told The Write-up.

Sycamore sees JCPenny serving to to revive the North Carolina-centered Belks, a struggling section keep chain with 300 outlets situated largely in the South, the supply said. Sycamore owns Belks, as properly as suppliers Talbots, Staples, The Restricted.

“JCP is the lifeboat for Belks, which needs to contend with Macy’s nationally,” the supply discussed.

Also in the running for JCPenny is Saks Fifth Avenue operator Hudson’s Bay Corporation, which presented $1.7 billion, and shopping mall operators Simon Assets and Brookfield Residence, which have teamed up with a $1.650 billion present, sources said.

Even though the deal is still topic to acceptance from the court as effectively as from JCPenney’s loan providers, lenders and board, Sycamore has been in the guide considering that bids have been due on July 22, sources explained.

“The bidders had been explained to that Belk/Sycamore submitted the strongest bid to acquire JCP” a single source said.

A second resource, on the other hand, mentioned that all of the bidders are even now in the operating. “The three bids are becoming analyzed and since there’s not a massive big difference concerning them, it signifies that all a few are viewing a identical valuation,” this human being stated.

Both equally JCPenney and Belk, established in 1888, have experienced from declining income amid competitors from fresher models and on line retailers like Amazon. JCPenney was also saddled with $5 billion in debt when it submitted for individual bankruptcy defense.

The Sycamore strategy involves rebranding some 250 JCPenney outlets to Belk retailers in marketplaces the place the two stores do not overlap. The relaxation of the JCPenny destinations would be liquidated, the source stated.

Plano, Texas-centered JCPenney operated 850 suppliers when it filed for bankruptcy defense on May possibly 15. In June, it introduced designs to close at least 154 merchants permanently.

Belk CEO Lisa Harper would operate the merged entity. While Sycamore is not intrigued in retaining the JCPenney brand name, it would obtain the legal rights to the identify and could sell the mental house at a afterwards date, a resource explained.

Sycamore acquired Belk in 2015. Harper changed Tim Belk as CEO the following calendar year — marking the very first time the relatives-owned department retail outlet chain was run by somebody outside the house the family members.

Before this calendar year, Sycamore provided $1 billion for a controlling stake in iconic but troubled lingerie peddler Victoria’s Top secret. But the buyout agency wiggled out of the offer in May by declaring that the retailer’s father or mother firm, L Models, experienced violated the conditions of their deal by closing Victoria’s Secret suppliers and failing to pay out their lease all through the pandemic.

Two weeks later, L Brand’s billionaire founder Retail legend Leslie Wexner retired soon after 56 years at the helm.

JCPenney and Sycamore declined to comment.