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JC Penney Lines Up 5-Year, $1.75 Billion Loan From Goldman

Monday, 29 Apr 2013 | 10:38 AM ET
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JC Penney on Monday said it had lined up a five-year, $1.75 billion financing package from Goldman Sachs, the latest move by the struggling retailer to shore up its finances.

The senior secured term loan facility, backed by the department store chain's real estate and other assets, may be used to fund working capital needs and for other corporate purposes, Penney said in a statement.

The company's real estate includes 429 of its 1,100 stores, a larger proportion than its rivals, as well as land at its headquarters in Plano, Texas.

Penney's announcement confirms what sources told Reuters on Friday. Its shares rose after the announcement Monday. (Click here to track Penney's stock.)

The financing comes as retailers gear up to place orders for the year-end holiday period, during which they often make one-third of their annual revenue and half of their annual profit.

Penney recently borrowed $850 million from its $1.85 billion revolving credit facility to buy inventory and revamp its business strategy.

The moves come after a disastrous year in which Penney's revenue plummeted 25 percent after CEO Ron Johnson's botched attempt to reinvent the company, in part by eliminating coupons. Johnson was ousted earlier this month.

Penney ended its fiscal year on Feb. 2 with $930 million in cash on hand, down from $1.51 billion a year earlier—a drop that would have been worse if not for deep spending cuts.

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