JC Penney intends to raise cash in 84 million share sale
In a statement issued yesterday, retailer JC Penney Co said it would be selling 84 million of its company shares to generate cash. This announcement came eight hours after it had declared that the company was turning around from its financial struggle.
JC Penney also said that it has tapped Goldman Sachs Group Inc to run the offering. Underwriters would be awarded a 30-day option to buy up to 12.6 million in additional shares, totalling 96.6 million. The value of the sale according to yesterday's closing share price would be around USD1 billion.
On August 20, JC Penney projected that the company would be liquid enough that it would not require outside funding. It also said that it would be ending its fiscal year with over USD1.5 billion in liquid assets. This news was reiterated in a note by analyst Charles Grom for Sterne Agee & Leach Inc, who said that JC Penney Chief Executive Officer Mike Ullman confirmed to him about the company's liquidity.
JC Penney spokeswoman Kristin Hays said in a phone interview about the share sale, "It's an opportunity to do things now. (The fundraising) has the dual benefit of easing the concerns of our vendors (and our employees.) It also shores up the balance sheet ahead of what could be a choppy holiday season for retailers."