J.C. Penney Co. Inc. has priced its private offering of senior secured notes.
The $500 million aggregate principal amount of 5.875 percent senior secured notes due 2023 will be privately placed. The offering is expected to close around June 23. The company said it also has a new amended $1.688 billion senior secured term loan.
The company said net proceeds from the notes, together with borrowings under the amended and restated senior secured term loan facility, will be used to repay the entire outstanding principal balance of its $2.25 billion five-year senior secured term loan due in 2018. J.C. Penney entered into the $2.25 billion loan in May 2013. Goldman Sachs was the lead arranger, and the loan is secured by mortgages of certain real estate owned by the retailers in addition to other assets.
The notes will be sold to qualified institutional buyers and to certain investors outside of the U.S.
Fitch upgraded the retailer’s issuer default rating to “B+” from “B,” noting confidence in the company’s ability to generate $950 million to $1 billion in earnings before interest, taxes, depreciation and amortization and the refinancing of the $2.25 billion term loan. Fitch said the rating outlook is “stable.”