J.C. Penney Co., the struggling retail chain, is exploring new ways to borrow against its real estate holdings to help raise cash, according to reports.
One of the possibilities includes spinning off real estate into a new unit that could issue debt, and another possibility involves exploring whether Penney could sell real estate and lease the property back, Bloomberg News reported
Reinstalled Chief Executive Officer Myron Ullman borrowed $850 million from J.C. Penney's $1.85 billion revolving credit line yesterday, a week after replacing Ron Johnson as CEO. Johnson's failed effort to overhaul the retailer consumed cash and led to the company's worst sales in more than two decades. J.C. Penney, which said yesterday it's working with advisers to raise capital, is focused on issuing debt, said another person familiar with the matter.
"We expect the company to pool its real estate into a new subsidiary and issue senior notes with unsecured guarantees to back these notes," Cantor Fitzgerald LP analysts said in an April 10 note. "We believe that JCP may be able issue up to $1.5 billion in this context."
J.C. Penny shares were up 1.3 percent on the report early Tuesday morning.
