J. C. Penney Company Inc announced that its wholly-owned subsidiary, J. C. Penney Corporation, Inc., has completed a new five-year $1.25 billion bank credit facility. The new facility replaces a $750 million credit facility that was scheduled to mature in April 2012 and provides further strength to the Company's liquidity position.
Effective May 2nd, the facility may be used for general corporate purposes and will mature in April 2016. In addition, the facility's financial covenant thresholds for both the leverage ratio and fixed charge coverage ratio have been set in alignment with the Company's 2011 operating plan and adjusted to remove the impact of non-cash pension expense. The facility is secured by the Company's inventory, which can be released upon attainment of certain credit rating levels.
Pursuant to this refinancing, the Company now expects to incur approximately $9.0 million in related fees and expenses in the first quarter of 2011. The Company plans to announce its first quarter results on Monday, May 16, 2011.
The arrangement of the credit facility was co-led by J. P. Morgan, Bank of America Merrill Lynch, Barclays Capital and Wells Fargo Bank.
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