PLANO, Texas (AP) — J.C. Penney Co. plans to sell up to 96.6 million shares of common stock in a public offering, evidence the chain is looking to shore up its cash reserves ahead of what is expected to be a fiercely competitive holiday shopping season.
The beleaguered chain says that it will be using the proceeds from the offering for general corporate purposes.
In a statement released after the regular markets closed, the Plano, Texas-based company said that it plans to sell 84 million shares of common stock. It is also granting the underwriter, Goldman Sachs, a 30-day option to purchase up to 12.6 million more shares in case of excess demand.
Based on Thursday's closing price of $10.42, the company would raise proceeds of more than $1 billion before expenses.
Shares fell more than 5 percent in after-markets trading after the announcement.
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 as of Friday.
The department store chain said Dennis P. Miller, senior vice president, finance, will serve as the interim principal accounting officer.
The development is the latest dose of bad news in a particularly rocky past few days for Penney, which is trying to recover from a failed turnaround attempt spearheaded by its former CEO Ron Johnson that led to disastrous results.
The retailer, which had seen its shares in a free fall in recent days, earlier on Thursday sought to appease investors who were worried about the company's cash liquidity and sales following a gloomy analyst report on the company.
The department store chain released a statement Thursday morning that it was pleased with its turnaround efforts. CNBC also quoted Penney's CEO Mike Ullman as saying that he doesn't see conditions this year where "we'd need to raise liquidity."
The statements came after Penney shares fell near 13-year lows on Wednesday to close at $10.12.
Wednesday's free fall came a day after a gloomy analysis by Goldman Sachs, which began coverage of Penney's unsecured debt with an "Underperform" rating. In the report, Goldman Sachs analyst Kristen McDuffy wrote she fears that Penney will be forced to tap into the debt markets for more cash. McDuffy also said that she believes that the current quarter as well as the fourth will be difficult, with business likely showing a slower-than-expected improvement.
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