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JCP Slides After Hours After Announcing An SEC Inquiry Into Its Follow On Equity Offering

Tyler Durden's picture





 

On September 26, mere hours after a foundering JCP swore up and down to CNBC it would not, repeat not, sell shares to raise much needed liquidity, the same company proceed to go ahead... and sell 84 million shares of stock via Goldman Sachs (which two days earlier suggesting JCP may be a bankruptcy candidate in a credit research report). Back then we summarizes JCP's actions as follows: "Guess what. They lied. Is this criminal? Surely the SEC will get involved immediately." Obviously, the last statement was delivered with an unlimited dose of sarcasm. Which is why we were absolutely floored to read in the company's just released 10-Q that the SEC did, in fact, do just that.

From the 10-Q:

On October 7, 2013, the Company received a letter of inquiry from the Securities and Exchange Commission requesting information regarding the Company’s liquidity, cash position, and debt and equity financing, as well as the Company’s underwritten public offering of common stock announced on September 26, 2013.  The Company is cooperating with the Securities and Exchange Commission in regards to its inquiry, including providing material requested by the Securities and Exchange Commission.

The immediate response of the stock after hours is to do what it has gotten so experienced in doing in the past year: it slides.

 


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Thu, 12/05/2013 - 19:39 | Link to Comment ebworthen
ebworthen's picture

Macy's, Target, and WalMart made polite requests that JCP be investigated.

Kmart (Sears Holdings) stayed out of it.

Thu, 12/05/2013 - 20:04 | Link to Comment aVileRat
aVileRat's picture

Calling it now: JCP settles with the SEC for a fine. They promise to implement stronger governance controls on the CEO & Sr. VP's. RSU's are clawed back for 6 months. Stock rallies. January comes, Xmas sales crater, company defaults. CDO's make a killing. Executives are given a golden handshake to resign from the board. JCP real estate sold to WMT or TGT.

Alternative call: Financing must be repriced, or company is found libel for misleading statements and is asked to delist. You know, what the rules say they should have to do for this pump scheme. Stock craters. 15,000 FT sales assoc's. join the Feb payroll collapse.

I got some gold calls at $3,000/oz to sell you if you think the Alt. Call will see the light of reality.

SHLD proved, there is nothing that can save JCP, it's a beta call on consumer expendible purchases. There is no money for those purchases. People are ignoring their David Button acid washed 4/year jean purchases to focus on things needed for either their educations (a bubble itself) or their energy/housing budget. If you are on the outs, or a struggling family your kids will wear the same clothes for two or three years, just like the 1970's and early 1990's post USSR. If JCP is acquired it will be done on leverage to get a call option on real estate in 30 years or done as a rebranding like HSBC.

 

 

Thu, 12/05/2013 - 21:22 | Link to Comment Quantum Nucleonics
Quantum Nucleonics's picture

Why on earth would WMT or TGT want any of JCP's crappy mall space?  That's partly how they killed JCP, by staying away from the mall.  The RE will go to a hedge fund or a mall REIT.

Thu, 12/05/2013 - 22:42 | Link to Comment 0b1knob
0b1knob's picture

Seems that every mall in the southern California area where I live is half empty.

Fri, 12/06/2013 - 05:00 | Link to Comment ebworthen
ebworthen's picture

They don't want the mall space, they just want to kick the competition while they are down, knock them out.

Kohls's is overpirced, Target is close to JCP, Walmart is at a lower price point.

Knock out JCP and all their sales, however poor, go to the competition.

Thu, 12/05/2013 - 22:19 | Link to Comment jcaz
jcaz's picture

That would work, except that JCP is out of cash to pay any fines-  their cash burn didn't take into account any future fines for malfeasance, they've already borrowed against everything they owned-

Game over for JCP-  and now bondholders have to stand behind the SEC in the line to pick thru this carcass......

Thu, 12/05/2013 - 19:50 | Link to Comment knukles
knukles's picture

Hah ha ha ha ha ha ah
I wrote here, immediately after that fiasco on CNBS, that they'd get fucking nailed.
And noted that it wouldn't be the underwriters, Goldman, up to thier asses in side deals and financings, but management

Because it was a management idiot that made the statement on the air....

Oh, holy bejesusfucks...
Will Goldman get away with it again?

Duh....

(And no, the excuse Goldman made me say it, won't work.)

Thu, 12/05/2013 - 20:43 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

It was probably GS that gave the SEC the tape of the JCP MGR talking.  They stuck it in with the porn tapes so the SEC would look at it.

Thu, 12/05/2013 - 19:54 | Link to Comment HulkHogan
HulkHogan's picture

I still think JCP is a buy, but I haven't pulled the trigger. Their earnings are getting better and at some point they become a takeover target. I just can't imagine which company would buy them. When LS Ayres went down, Macy's was there to buy them (if I remember correctly), but I can't think of a company that would want to move into the mall superstore sector. I'm looking for suggestions from the ZH crowd.

Thu, 12/05/2013 - 20:17 | Link to Comment TrustWho
TrustWho's picture

Right, JCP is a takeover target though bankruptcy court. This Christmas is HORRIBLE for brick and mortar retail establishments. Margins on low sales will be horrendous. You can thank me later.

Thu, 12/05/2013 - 22:06 | Link to Comment Papasmurf
Papasmurf's picture

Before you pull the trigger, walk through one of their stores. 

Thu, 12/05/2013 - 22:22 | Link to Comment optimator
optimator's picture

or a cemetery -- same thing.

Thu, 12/05/2013 - 22:26 | Link to Comment jcaz
jcaz's picture

"Earnings getting better"?   You better take a glance at their balance sheet before you invest on THAT idea, Hulkster-

They had a SALES pop over Black Friday-  in which they no doubt CRUSHED their margin to do so, so bye-bye earnings-   and now they're gonna be paying the SEC out of a cash burn that, by all accounts,  is increasing faster than expected-

When management starts lying to shareholders daily, it's game over,  brutha!

Thu, 12/05/2013 - 22:36 | Link to Comment HulkHogan
HulkHogan's picture

No up votes and 6 down votes tells me I'm on the right track saying that JCP is a buy. In 5 years of existence, the ZH crowd hasn't been on the winning side of a trade yet. Long JCP and their 14% bonds.

Thu, 12/05/2013 - 22:47 | Link to Comment insanelysane
insanelysane's picture

Trading JCP maybe but long JCP would appear foolish.  Why would anyone takeover brick and mortar?  I thought the same thing a few years ago when Borders was in trouble.  There were 2 profitable stores near my home.  They closed and the world went on.  The JCP brand isn't worth anything to anyone in retail.  There are higher end and lower end brands that are much stronger.  

Thu, 12/05/2013 - 22:56 | Link to Comment HulkHogan
HulkHogan's picture

Borders was different though. I never saw anyone inside a Borders. Everyone was at B&N, but I see tons of people inside JCP. The mess over there has been great advertizing. I've gone through our JCP a few times recently, and that place is packed.

Fri, 12/06/2013 - 09:40 | Link to Comment jcaz
jcaz's picture

ROFLMAO!!   Oh,  so you're only on here to tout the 100 shares of JCP you already own, eh Hulk?

Wow, you're a genius- if only more people would think of that.....

Truly, thank you- it's dupes like you that make my puts possible.

 

Thu, 12/05/2013 - 19:55 | Link to Comment 666
666's picture

It's one thing to make an inquiry; it's entirely another thing to jail the bastards.

Thu, 12/05/2013 - 20:33 | Link to Comment DeadFred
DeadFred's picture

More evidence that there is a war going on in the netherworld and the powers that be are duking it out.

Edit :)

Thu, 12/05/2013 - 20:46 | Link to Comment Trimmed Hedge
Trimmed Hedge's picture

Slide, slide.. slippity slide...

http://www.youtube.com/watch?v=a3QAHZicSjQ

Thu, 12/05/2013 - 21:03 | Link to Comment NoDebt
NoDebt's picture

WHo do these JCP guys think they are?  Senators?  You can't do stuff like that unless you are senator-level or above.

Thu, 12/05/2013 - 22:43 | Link to Comment bubblemania
bubblemania's picture

Bullish!

Fri, 12/06/2013 - 00:17 | Link to Comment yogibear
yogibear's picture

Sorry, for now only the cooked financial books are available.

Fri, 12/06/2013 - 10:16 | Link to Comment corporatewhore
corporatewhore's picture

I was in a jcp on Wednesday slumming.  I had to return some cheap piece of table made in china from plastic and melba toast.

There was no line.  The FSA manning the customer service registers looked at me and said you must go to the end of the line.  I looked around and smartly said "What line?"--there wasn't any.  But I proceeded to honor their request in order to get my refund.  I was a sheeple.

The store was dead dead dead.  There weren't enough sales people.  The store is stocked but no one is buying.  The staff is totally clueless on training.  In fact they had to call the Leader on Duty (MBA bullshit name for Manager on Duty) to do the refund.

There is no way to turn this around except through bankruptcy imho

 

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