J.C. Penney Co Inc (NYSE:JCP) has entered into an agreement with former board member and largest shareholder Bill Ackman that paves the way for him to completely walk away from the company.
Ackman, whose firm Pershing Square Capital Management owns about 18 percent of J.C. Penney, resigned from the board earlier this week after two years of campaigning to transform the struggling department store operator.
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Ackman has not said publicly what he plans to do with his shares but if he were to sell at current prices, he would lose more than $300 million. The paper loss figure does not include shares bought through swaps.
"It is paving the way for (Pershing Square) to sell the stock if they choose to do so," Imperial Capital analyst Mary Ross Gilbert said after J.C. Penney disclosed the agreement in a regulatory filing on Friday.
Under the deal, Ackman can make up to four requests to the company to register the sale of his restricted common stock.
Restricted shares are issued to certain company executives and shareholders to prevent premature selling that might adversely affect the company.
Such stock cannot be sold without registration with the Securities and Exchange Commission or through some other exemption.
Ackman was restricted from selling stock immediately after his resignation from the board as he was privy to confidential information about the company as a director.
Shares of the company, which reports second-quarter results on Tuesday, were down 2 percent at $13.60 in premarket trading.
While Ackman may plan to exit the company, other investors have shown interest. Billionaire investor and philanthropist George Soros had added 2 million shares to raise his holding to 19.98 million shares, a regulatory filing showed on Wednesday.