JCPenney To Cut Debt With Proceeds From Sale
08 Mar 08:14
JCPenney Sells Direct Marketing Services and Establishes Long Term Marketing
Alliance With AEGON, N.V.
PLANO, Texas, March 8 /PRNewswire/ -- J. C. Penney Company, Inc. (NYSE: JCP)
announced today the signing of a definitive agreement with a U.S. subsidiary of
AEGON, N.V. (NYSE: AEG) for the sale of its J. C. Penney Direct Marketing
Services, Inc. (DMS) assets, including its J. C. Penney Life Insurance
subsidiaries. The parties also established a 15 year strategic marketing
alliance designed to offer an expanded range of financial and membership
services products to JCPenney customers. JCPenney will receive cash proceeds
at closing of approximately $1.3 billion and will receive annual cash payments
over the next 15 years pursuant to the terms of the marketing services
arrangement. The present value of this additional stream of payments is
estimated to be up to $300 million, bringing the present value of the
transactions to approximately $1.6 billion.
Allen Questrom, Chairman and Chief Executive Officer said, "This sale and
strategic marketing alliance will allow JCPenney to focus on its retailing
businesses. At the same time, JCPenney will better serve its customers through
access to the diverse products and services of the AEGON family of businesses
and their direct marketing capabilities."
Questrom added, "The proceeds from the sale, which are expected to be
approximately $1.1 billion after tax, will significantly strengthen the
Company's financial flexibility. We anticipate that the majority of these
proceeds will be used for debt reduction. In combination with the $1 billion
of cash investments on the balance sheet at the beginning of the year, the
proceeds provide the ability to satisfy our financing requirements well into
the future."
AEGON, N.V. is one of the world's largest insurance organizations with assets
of $230 billion. J. C.Penney Direct Marketing Services, Inc., a wholly owned
subsidiary of J. C. Penney Company, Inc., markets life, health, accident,
disability and credit insurance as well as membership services products to
various credit card files by direct response solicitation primarily in the
United States and Canada. The closing of these transactions is anticipated by
the end of JCPenney's second quarter 2001, subject to customary conditions,
including regulatory approvals. The sale will generate a pre-tax book loss of
about $100 million, and will require JCPenney to reflect the operating results,
as well as the assets and liabilities, of DMS as a discontinued operation.
Credit Suisse First Boston Corporation acted as financial advisor to J. C.
Penney Company, Inc. in these transactions.
J. C. Penney Company, Inc. is one of America's largest department store,
drugstore, catalog and e-commerce retailers, employing more than 260,000
associates. The Company operates approximately 1,075 JCPenney department
stores in all 50 states, Puerto Rico, and Mexico. In addition, the Company
operates approximately 50 Renner department stores in Brazil. Eckerd operates
approximately 2,650 drugstores throughout the Southeast, Sunbelt, and Northeast
regions of the U.S. JCPenney Catalog, including e-commerce, is the nation's
largest catalog merchant of general merchandise. J. C. Penney Direct Marketing
Services, Inc. markets insurance products and membership services to various
credit card customers by direct response solicitations primarily in the United
States and Canada. In addition, J.C. Penney Company, Inc. is the sponsor of
JCPenney Afterschool, a partnership committed to providing kids with
high-quality afterschool programs to help them reach their full potential.
AEGON, N.V., with USD 230 billion (EUR 249 billion) in assets, is one of the
world's largest listed insurance organizations. Its largest business units
operate in the United States of America, the Netherlands, the UK, Hungary,
Spain, Mexico and Canada. The AEGON Group focuses on insurance as its core
business, with a strong emphasis on marketing life insurance, pensions,
investment products and related financial services. AEGON N.V. shares are
listed on the Amsterdam, Frankfurt, London, New York, Tokyo and Zurich Stock
Exchanges. Options on AEGON shares are traded on the Amsterdam Exchanges, the
Philadelphia Stock Exchange and the Chicago Board Options Exchange.
This release may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements, which reflect the Company's current views of future events and
financial performance, involve known and unknown risks and uncertainties that
may cause the Company's actual results to be materially different from planned
or expected results. Those risks and uncertainties include but are not limited
to, competition, consumer demand, seasonality, economic conditions, and
government activity. Investors should take such risks into account when making
investment decisions. SOURCE J. C. Penney Company, Inc.
/CONTACT: Rita Trevino Flynn, Public Relations, 972-431-4753, or
rflynn@jcpenney.com, or Eli Akresh, Investor Relations, 972-431-2207, or
eakresh@jcpenney.com, both of J. C. Penney Company, Inc./
/Photo: NewsCom: newscom.com PR
Newswire Photo Desk, 888-776-6555 or 201-369-3467/
/Web site: jcpenney.com /
(JCP AEG) CO: J. C. Penney Company, Inc.; AEGON, N.V.; J. C. Penney Direct
Marketing
Services, Inc. ST: Texas, Netherlands IN: REA INS HEA SU: JVN TNM
(END) DOW JONES NEWS 03-08-01
08:14 AM |
