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JCPenney (JCP) Seeks to Raise Over $1B as Cash Pile Dwindles

April 12, 2013 7:33 AM EDT
Despite recent woes at the company, retailer JCPenney (NYSE: JCP) isn't giving up yet.

Reports out Friday have JCPenney tapping the advisory arm of private equity firm Blackstone (NYSE: BX) to advise on how to shore-up its eroding cash pile. The retailer may also be in discussions to seek $1 billion in financing, with one option being a minority stake sale.

The WSJ cites bond analysts in saying the JCPenney's operations won't be able to generate cash needed to keep the company afloat.

JCPenney's largest shareholder, Bill Ackman of Pershing Square, may also be willing to put up funds to support JCPenney and thinks others might be, as well. During a speech at an NYU conference on Thursday, Ackman said, "I've spoken to the other big holders, a number of them, and if the money's needed, the shareholders will put it up." He didn't think comments would be published, said Reuters. He also affirmed belief that JCPenney was worth at least $75 per share, despite a drop of over 50 percent during the last year to 18 months.

Ackman has been criticized lately for his efforts to oust Mike Ullman and put in place Ron Johnson as CEO of JCPenney in 2011. Johnson was relieved of the position earlier this week, with Ullman returning as CEO last Monday. Ackman commented at the NYU event that the "physical presence" of a CEO is crucial to a turnaround and that the lack of a physical presence was a weak point for Johnson.

While Pershing Square holds an 18 percent stake in Penney's, other large investors include Dodge & Cox, State Street Global Advisors, Fidelity and Wellington Management.

JCPenney boasts a market cap of about $3.3 billion, with $3 billion of debt on the books. Shares are down 1 percent early Friday.


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