Reuters: Global Markets: J.C. Penney says pleased with turnaround progress, shares rebound

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J.C. Penney says pleased with turnaround progress, shares rebound Sep 26th 2013, 13:21 Tweet Share this Email Print Related Topics Hot Stocks » Asian Markets » Customers ride the escalator at a J.C. Penney store in New York August 14, 2013. Credit: Reuters/Brendan McDermid Thu Sep 26, 2013 8:53am EDT (Reuters) - J.C. Penney Co Inc (JCP.N) shares fell more than 8 percent in premarket trading amid concerns the retailer may not be able to boost its cash reserves ahead of the crucial holiday season. The struggling retailer is looking to raise up to $1 billion in new equity, Reuters reported on Wednesday. "We still believe JCP has ample liquidity for 2013, but if cash burn is running worse than our estimates, the company may need to raise capital to cushion against a potentially challenging holiday season," Citigroup analyst Deborah Weinswig said in a note. She reaffirmed her "sell" rating on the stock, cutting her price target to $7 from $11. J.C. Penney shares, which have fallen about 49 percent this year, were trading at $9.38 before the bell on Thursday. They fell 15 percent on Wednesday after Goldman Sachs said it expects the retailer's sales to improve more slowly than expected. Citigroup's Weinswig also said the turnaround was taking longer than hoped in a softening macroeconomic environment. The cost for insurance against a J.C. Penney default has shot back to near record-high levels over the last week. The company, which has a "CCC+" credit rating from Standard & Poor's, reflecting a substantial risk in owning its debt, has about $2.6 billion of outstanding bonds. The company's benchmark 5-year credit default swap contract price surged by more than 13 percent on Wednesday, according to Markit data. The cost to insure $10 million of J.C. Penney bonds against a default for five years now requires an upfront payment of about $2.2 million plus quarterly payments of about $300,000 for the duration of the contract. The contract's pricing reflects a default probability of nearly 65 percent. (Reporting by Siddharth Cavale in Bangalore and Dan Burns in New York; Editing by Kirti Pandey) Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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