Retailer J.C. Penney Co. Inc. (NYSE: JCP) said this morning that it has received a commitment from Goldman Sachs Group Inc. (NYSE: GS) for a five-year $1.75 billion senior secured term loan facility. The term loan will be used for working capital, other corporate purposes, “and to amend, acquire, or satisfy and discharge [Penney’s] outstanding 7.125% Debentures Due 2023.” Penney has not disclosed the terms of the loan nor its interest rate.

The loan is backed by Penney’s real estate and other assets, and is the second major borrowing the company has announced since interim CEO Myron Ullman took over the reins of the company. Penney’s drew $850 million from its $1.85 billion revolving credit facility earlier this month.

Today’s loan virtually guarantees that Penney’s will not default on any of its debt before the company’s next payment on $200 million in bonds due in April 2015. But the real safety play here is the elimination of a covenant the company had to agree to in order to receive the 2023 debt.

According to Penney’s 2012 Form 10-K, the $255 million 7.125% debenture due in 2023 includes a covenant that requires Penney’s to maintain a minimum of 200% of net tangible assets to senior funded indebtedness. The loan from Goldman Sachs doubtless eliminates that covenant, giving Penney more maneuvering space for a much longer time. And buying time is what it’s all about for Penney now.

Shares opened nearly 4% higher this morning before pulling back to a current level of $17.20, up about 1.2%, in a 52-week range of $13.55 to $36.75.

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