JC Penney Selling 96.6M Shares To Raise Funds

J.C. Penney Co. Inc. (NYSE:JCP) announced Thursday evening that it planned to sell up to 96.6 million shares of common stock in a public offering, The New York Times and Reuters reported, an indication that the deeply troubled retailer is looking to shore up its cash reserves.

The company said it would use the proceeds from the offering for general corporate purposes.

In a statement released after regular trading ended, Penney said it would sell 84 million shares of common stock. It also granted its underwriter, Goldman Sachs, a 30-day option to buy up to 12.6 million more shares in case of excess demand.

Based on Penney’s closing price of $10.42 on Thursday, the offering would raise up to $1 billion. But the retailer’s shares fell 42 cents, or 4 percent, to $10 in after-hours trading after the announcement.

Penney did not disclose the price at which it plans to sell the shares. Its share price, which has declined by nearly half so far in 2013, fell 4 percent to $10 after the announcement.

Penney, which currently has 220 million shares on issue and a market value of about $2.2 billion, has been hit by collapsing sales after a failed attempt in 2012 to go up-market.

Earlier on Thursday, Penney sought to appease investors who were worried about its cash liquidity and sales after a Goldman Sachs analyst issued a gloomy report on the company. It said in a statement that it was pleased with its turnaround efforts. And CNBC quoted Penney’s chief executive, Myron (Mike) E. Ullman III, as saying that he did not see conditions this year where “we’d need to raise liquidity.”

Separately, Penney said in a filing with the Securities and Exchange Commission that its senior vice president and controller, Mark R. Sweeney, left the company last Friday.

Penney spokeswoman Kristin Hays denied an earlier CNBC report that said Ullman told investors on Wednesday that the retailer did not see the need to raise more money before the end of the fourth quarter, which ends in early February. She said that Ullman had only said Penney had sufficient liquidity and that the comment was misinterpreted, Reuters reported.