Department store chain J.C. Penney Company, Inc. (NYSE:JCP), which is struggling for survival, has been given the green signal by its lenders to sell billions of dollars’ worth of stock and debt if required.
In a regulatory filing on February 12, where it had announced changes to its primary credit line, the bankers to the company had said that the retailer can sell convertible preferred stock without triggering repayment provisions.
The changes also allow the company to avail credit up to $1.75 billion by pledging its real estate and other fixed assets as collateral.
J.C. Penney has yet to borrow any money under the credit line, provided by a syndicate of banks including units of JPMorgan Chase & Co. and Bank of America Corp.
Analysts said that the company needed plenty of cash as it has already posted losses in five consecutive quarters. Chief Executive Ron Johnson is seeking to transform the company and turn it around by adopting various strategies such as creating in-store boutiques and reducing its reliance on discount coupons and sales events.
Hedge fund investor William Ackman of Pershing Square Management is also on the board of the retailer and is its largest shareholder with an 18 percent stake.
Under the revised credit agreement Pershing Square can raise its stake in JC Penney.
J.C. Penney rose 3.76 percent to $22.36 at 12.27 p.m. in New York, after jumping 6.7 percent On Thursday.