J.C. Penney shares tank after report that it hired debt advisors
J.C. Penney Co. Inc. JCP, -16.97% shares fell 10.2% in Friday premarket, and more than 11% after the market opened following a late-Thursday report that it has hired advisors to restructure its debt in order to allow for more time for a turnaround. J.C. Penney stock has fallen 65% over the past year while the S&P 500 index SPX, -0.62% has risen 6.1% over the period. As of May 4, 2019, the company had total long-term debt of about $3.9 billion, according to FactSet. Restructuring plans are in the early stages, according to Reuters. "Although we recognize that J.C. Penney continues to maintain good liquidity, with about $1.75 billion of revolver availability and cash, our downgrade to Caa1 stable reflects the reality that leverage remains extremely elevated as the company embarks on its turnaround," Moody’s wrote in a June 17 note. "Despite the areas of opportunity for improvement, which include its assortments, management of shrink and online, significant progress will take time. In addition, the magnitude of the improvement needed to refinance the capital structure long term is also significant." J.C. Penney released a statement late Friday saying the company "routinely" hires outside advisors, which is helping it to take measures to improve the business. "We have no significant debt maturities coming due in the near term, and we continue to maintain a strong liquidity position," the company said. "Also, given our strong liquidity position we can confirm that we have not hired any advisors to prepare for an in-court restructuring or bankruptcy." J.C. Penney stock closed Friday down 17%.
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