Published April 18, 2013
J.C. Penney Co Inc is speaking with Wells Fargo & Co and others, including parties that invest in troubled companies, about a new loan to help it shore up its cash reserves, the Wall Street Journal reported on Thursday, citing people familiar with the matter.
Other parties involved in talks about providing funds for the loan include a lending unit of private-equity firm TPG and Gordon Brothers Group, an investment firm that sometimes finances troubled retailers, those people said, according to the paper.
Penney and Wells Fargo declined to comment.
The $500 million loan would come due in five years and be backed by Penney's inventory, accounts receivable and intellectual property, the people said, according to the report.
Penney is expected to reach a deal on the loan perhaps in the coming days, with active discussions on Thursday and the membership of the lending group still fluid, the people said, according to the Journal.
On Monday, Penney said it had borrowed $850 million from its $1.85 billion revolving credit facility as it revamps its business strategy following the departure of Chief Executive Ron Johnson. Under Johnson, Penney tried to eliminate coupons and turned off its core shoppers, leading to steep declines in revenue.
Last week, Penney brought back Johnson's predecessor, Myron Ullman, who is expected to return to the chain's old pricing strategy that relied heavily on coupons to draw in shoppers.
(Reporting by Jessica Wohl in Chicago and Dhanya Skariachan and Martinne Geller in New York; Editing by Nick Zieminski)