J.C. Penney has confirmed that it will receive a $1.75B loan from Goldman Sachs.
The massive five-year loan will help the struggling company pay for its operating costs as well as cover some of its growing debt. Although rumors started to circulate on Friday, J.C. Penney didn’t confirm the news until Monday.
The confirmation of the $1.75 billion loan comes days after billionaire financier George Soros revealed that he had taken a 7.9 percent stake in the retailer. This will make him the fourth larger largest J.C. Penney shareholder.
Although getting billions to stay afloat is certainly good news for the company, it illustrates how much the retailer has been struggling in recent months. J.C. Penney revealed earlier this month that it would borrow $850 million in order to boost its inventory and help out with operations.
The Chief Financial Officer said at the time:
“As we near completion of the home department transformation in over 500 stores, we have been undertaking and will continue to experience a significant inventory build and increase in capital expenditures. The draw under our revolver today provides more than our current funding needs to ensure our continued liquidity. Moreover, we will continue to explore additional capital raising alternatives with the assistance of our financial advisors.”
Chief Executive Officer Myron Ullman has been working hard to correct the problems left behind by former CEO Ron Johnson. Since ditching sales and coupons for low prices didn’t bring people back through the doors, Ullman has been increasing prices on some of the store’s products.
For example, the folks at Bloomberg pointed out that Ullman has increased the price of a pair of Dockers pants from $35 to $58. Sales and coupons will return, which essentially brings the company back to where it was before Johnson’s involvement.
What do you think about J.C. Penney getting a $1.75B loan from Goldman Sachs? Do you think the retailer’s days are numbered?
[Image via Wikimedia Commons]