JC Penney Appeals to Debt Restructuring Advisers: Sources

J.C. Penney hired advisers to explore debt restructuring options that would give the US retailer, who is losing money, more time to recover, an industry specialist told reporters on Thursday.

This 117 year old chain store initiative represents a very ambitious attempt to put its finances in order before its coffers are exhausted and its debt, of a total amount of of about $ 4 billion, matures in the next few years.

Plano-based Texan faces fierce competition from discount retailers such as Marshalls and TJ from TJX Companies Maxx and JC Penney have struggled to boost the profile of their e-commerce business compete with established players such as Amazon.com.

Although J.C. Penney has a revolving line of credit worth more than $ 1.5 billion, investors continued to sell the retailer's shares in response to financial losses. His credit rating is deep on the territory of the junk, which increases his borrowing costs.

J.C. Penney has had talks in recent weeks with lawyers and bankers specializing in advising troubled companies on debt restructuring and other financial solutions, sources said.

The retailer, which employs 95,000 people and operates more than 860 stores, is exploring options that could include raising additional funds or negotiating with creditors to push back debt maturities, the sources said.

One of the sources cautioned that J.C. Penney's restructuring plans are at an early stage. The discussions with the restructuring experts attest to JP Penney's determination to take action in the coming months to increase his financial flexibility and avoid facing a possible bankruptcy, the source added.

The sources asked for anonymity because the deliberations are confidential.

The deterioration of the retail landscape has forced long-time brick-and-mortar chains, including Toys "R" Us Inc. and Sears Holdings, to seek bankruptcy protection in the past two years. Some retailers had to liquidate. Others, such as Neiman Marcus and J. Crew Group, have managed to avoid this type of calculation by entering into agreements with creditors to restructure their debts.

Founded in Kemmerer, Wyoming, in 1902 by James Cash Penney, the eponymous company sells middle-price clothing, household items, jewelry, towels and other merchandise.

J.C. Penney is facing financial losses that collectively exceeded $ 1.7 billion between 2014 and the first three months of this year.

The company's shares, down more than 50% from last year despite rising consumer spending in the United States, are trading at just over $ 1, giving it a market capitalization of $ 342 million. Debt is trading at difficult levels

The chain of department stores hired a new general manager in late 2018, who decided to stop selling home appliances and limit its supply of furniture. The decisions were aimed at refocusing JC Penney on his roots in selling middle-price clothing and other products destined for American families, though badysts are questioning whether this strategy will result in a successful turnaround at a retailer who suffers from a lack of money. lower traffic in the stores.

In May, the retailer said sales at stores that had been open for at least a year had declined more than expected in the first quarter, and its net loss almost doubled to $ 154 million. Despite the closure of stores over the years and the redesign of remaining locations, badysts have expressed concern that J.C. Penney will be short of time and money to reverse his situation.