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JCPenney's Long Awaited Revolver Drawdown Arrives, Total Debt Rises To $3.8 Billion
Just four days ago we noted the 'endgame' scenario that JCP appears to be heading in as they looked to raise new capital. It would appear things have escalated a little more quickly than hoped. Amid chatter of vendor concerns and what appears to be a slower process than they hoped for raising capital, the firm announced today, that "the Company has drawn $850 million out of its $1.85 billion committed revolving credit facility. Proceeds will be used to fund working capital requirements and capital expenditures, including the replenishment of inventory levels in anticipation of the completion of its newly renovated home departments next month." More worrisome is the fact that the firm managed to extract only $850 million on $2.3 billion in Inventory: while not completely worthless as we first suspected, it appears JPM is only willing to give JPM credit for about a third of its inventory at liquidation value. Remember that the revolver it is the cheapest financing JCP has in palce which raises the question - why not draw more? Ask JPM.
This is being spun as positively as possible by the firm, but with CDS trading wide of 900bps and cash clearly burning faster than expected, things are not good at JCP (down 1.5% in the pre-market after being +3% earlier).
Finally, this means that JCP is now fresh out of encumerable "secured" assets and will be forced to raise capital via the equity route (unless someone has a real deathwish and wishes to buy unsecured HY debt, most likely issued by Jefferies) and given that Total Pro Forma debt rises to $3.8 billion on just about ($800MM) of EBITDA, this means that any additional capital raising will be through selling shares (to Bill Ackman only?) most likely somewhere in the single digits range.
Company Draws On Credit Facility To Fund Ongoing Spending, Including Inventory and Renovations Ahead of New Home Launch
Working With Financial Advisors to Develop Strategic Financial Plan Going Forward
PLANO, Texas (April 15, 2013) - J. C. Penney Company, Inc. (NYSE:JCP) today announced plans to enhance the Company's financial flexibility and position. As part of that process, and consistent with its previously stated plans, the Company has drawn $850 million out of its $1.85 billion committed revolving credit facility. Proceeds will be used to fund working capital requirements and capital expenditures, including the replenishment of inventory levels in anticipation of the completion of its newly renovated home departments next month.
Chief Financial Officer Ken Hannah said, "Earlier this year, we increased our revolving credit facility in anticipation of operating, working capital and capital expenditure needs, especially during the first half of the year. As we near completion of the home department transformation in over 500 stores, we have been undertaking and will continue to experience a significant inventory build and increase in capital expenditures."
Hannah continued, "The draw under our revolver today provides more than our current funding needs to ensure our continued liquidity. Moreover, we will continue to explore additional capital raising alternatives with the assistance of our financial advisors."
Over the past few months, the Company has worked to improve performance through changes in its pricing and promotional strategies, including the return of coupons, and the development of other new initiatives to drive store traffic and deliver the style, quality and value that its customers want. The action today bolsters those efforts, as well as the Company's on-going financial position.
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They should sell their gold.
Summary: JCP circling the drain.
yes and their share price is down less than 1%. For a company on the balls of their ass. Gold however is down 6% and silver closer to 10%...due to the obvious recovery.
Short shorts
Yeah - to pay for the golden parachutes for their crack C-Team.
Have you seen their jewelry counters, fonz? Almost empty...never seen anything like it in my lifetime....what are they going to sell? And how about all that money remodelling?
Yips!
Inventory will decline as suppliers refuse to supply.
Isn't JMP the lender of last resort? Oh wait, that is the Fed, but then again, it's the same thing, no? My head hurts....
In other news Ackman was found dead from an overdose in his bathtub.
And Icahn sent a Hallmark "condolances on your loss" card, but only to keep up appearances. To gloat at this point would have been unseemly.
Ackman's other investments have done pretty good, actually, but everything he's spouted off about in the media he's taken a beating. And that's what will be remembered.
Nursing home patient. Sucking the life and $ out of everyone for one last grasp of air.
I haven't heard of anyone shopping at a JCP for years. Who gives a flying fuck it's an old dinosaur and thanks to them my poor parents could only afford to buy me 3-4 shirts every year in grade school. LOL. Die already.
Of course some of the upper mgt is still making some good $, they don't want to lose their job so they drag this POS along as long as they can. Just like US politicians and the miserable US economy.
Empty this weekend. Grim.
Death Spiral.
"it appears JPM is only willing to give JPM credit for about a third of its inventory at liquidation value."
While this does adhere to the JPM controls everything philosophy, I think one of those should read JCP.
DEBT IS A ASSET RIGHT?!!
180 day and out receivables are assets as well right?
Because, the Fed doesn’t want a line item for pillow cases, costume jewelry, and cardigan sweaters on its balance sheet. That’s almost as shitty as MBS.
well the fed is in the toilet paper business so home goods is a step up.
Bullish for commercial property reits as JCP will have to clear out their shit and make room for more Cash4Gold outlets.
Does JCP sell whisky to go with that revolver?
Perhaps they should.
There was a time-early 1900's say, that you could buy a revolver from JCP catalog.
Someone call Martha Stewart.
AAAAAAY! You said REVOLVER. Are you advoctating GUN VIOLENCE? (sarc)
Have you seen the plastic crap she's flogging? She should be in jail.
She was. She didn't like it, so she redecorated the place. I bet they were never so glad to get rid of an inmate as they were to have her out.
They should just close all their fucking doors and open an account on eBay.
visited a jcp sunday. it blows.
Visited a JPM monday. It sucks.
Tough to compete against Wally World on selling cheap Chinese sh*t, Bangladesh clothes, etc...
Maybe they need to hire Jenna Jameson as the new spokesperson, at least it will create some buzz!
http://en.wikipedia.org/wiki/Jenna_Jameson
March 7th, 2013
JCPenney’s toxic workplace culture exterminates and color codes employeesRon Johnson became JCPenney CEO on Nov. 2011. Since then, he has purged all of the former executives and 1900 corporate HQ employees at Plano, Texas. The company has also cut 19,000 store employees. In his first year, store sales fell 23%. Penney stock shares fell 62% over the past year. So much for his ambitious turnaround plan.
HQ employees loathe and fear him. Now he launches a new plan to eliminate store workers by color code.
http://www.workplacebullying.org/2013/03/07/jcp/
My guess is few employees will miss the guy.
Color-Codes Macht Frei!
As in, what a sadistic employee management technique--Just fire or layoff those you need to and be done with it instead of tormenting them with this Red/Yellow/Green shit.
hujel
one million dollar bills confiscated in turkey :
http://tinyurl.com/c5pvvu9
No problem, JCP! Just take out a loan from Bank of America at 20%....live like the rest of the public has to!
Maybe Ellen DeGeneres wasn't a good spokesperson after all. Good job pissing off 50% of your customer base - Liberal idiots.
Im an educated consumer. I go to Syms
Somebody shipped their pants.
That ad was hysterical. I saw it over the weekend. Too bad it was KMart (or some other brick-and-mortar retailer I couldn't give a ship about).
I think I might just go ship my pants right now. For sure, gold is shipping the bed this morning. Etc, etc.
The age of consumerism is over.
Kohl's is eating their lunch. The stores are packed and they are developing a loyal customer base.
It's time for another round of, FILL IN THE BLANKS!
JC Penny is _____________ and as for a trade recommendation you should ________________
http://www.youtube.com/watch?v=ZS2Z19yTuPI
Just $10 more and I'll be back into the Silver Games!
Not even accepting bitcoin would have helped their sales. JC Penny sucks.
It is not good when a company needs to borrow at the low point in their working capital cycle. Without a cash infusion or significant change in costs this company will be bankrupt in 2014 after next year's holiday season. Bye-bye JCP!
JCP headquarters is FILLED TO THE MAX with idiots. they could lose half of management and it wouldnt hurt. the problem is that when these companies layoff, all the smart workers are canned and the affirmative actions keep their jobs and the company is then filled with retards.
One of the conditions of the revolving credit facility with JPM is that JCP must install the "Dimon Collection" in each men's department.
The fabric for the spring/summer line is a new material called "SearedSucker." Details of the pants/shorts include deep pockets and gold plated zippers. An embroidered whale adorns the back patch pocket. Sportcoats have multiple hidden pockets.
If the company makes it to the fall season, plans are in the works for an all fleece "Dimon Collection."
This is not a comment on JCP per se--don't know much about it--but a commentary on the sad frog-boil condition of the American people.
I don't think that it is so old-fashion to have prices on things that are the price and not some gamed starting point for "sales," "discounts," and "special days."
Before my family and I expated ourselves last year--exit stage left--we bought some jeans and things at JCP and liked that the price was the price and not some gimmick that was going to see us paying inflated prices this week in lieu of next week's "sale" prices.
With that said, the American people's rejection of "Everyday Low Prices" is more a commentary on their condition than JCP's. They have been so conditioned to be manipulated that they would rather hang-on to the rigged game--Khol's, etc.--than pay a fair price. And they know it is a rigged game. Sad,, just sad.
I am NOT saying that JCP would, could or should have been saved--don't know--but that the American people are just about cooked. It isn't hot water anymore but cooking broth. hujel
"Hello, this is Peggy at JPM Prime Credit.... You have point to redeem?"