JC Penney Skips $12 Million Interest Payment To Evaluate Its ‘Strategic Alternatives’ During Coronavirus Pandemic

As JC Penney’s (JCP) stores remain dark because of the coronavirus pandemic, the department store retailer has made the decision to forego paying a $12 million interest payment as it considers its financial options.

The payment, which was due on Wednesday, has now entered into a 30-day grace period, which the company said in its Securities and Exchange Commission filing, would allow it “to evaluate certain strategic alternatives, none of which have been implemented at this time.”

If the $12 million payment is not made within 30 days, JC Penney will “default” on the note, the filing said.

JC Penney has reportedly been weighing filing for bankruptcy, hiring consulting firm AlixPartners LLP. While no final decision has been made by the retailer, the company has been in talks with its lenders to evaluate its financial options as its nearly $4 billion debt starts to come due.

JC Penney closed its stores until further notice and furloughed the majority of its employees because of the coronavirus in the midst of a turnaround strategy. The company had seen its sales drop, reporting losses of 8.1% in 2019.

“The Coronavirus (COVID-19) pandemic has created unprecedented challenges for department store retailers across the industry and has resulted in extensive store closings,” a spokeswoman told CNBC.

Shares of JC Penney stock were up 7.6526% as of 12:07 p.m. EDT on Thursday.