J.C. Penney Company, Inc. (NYSE:JCP) disclosed late Thursday that the Securities and Exchange Commission has requested information on its liquidity, cash position and debt and equity financing.
The SEC is also probing the struggling retailer’s September 26th stock offering that raised $810 million.
Letter from SEC
The Plano, Texas-based J.C. Penney disclosed yesterday in a quarterly filing with the SEC that it received a letter from the regulator on October 7th requesting information regarding the company’s liquidity, cash position and debt and equity financing as well as the company’s underwritten public offering of common stock.
J.C. Penney’s $810 million share sale
As reported earlier, in September, J.C. Penney Company, Inc. (NYSE:JCP) surprisingly announced its intention to offer 84 million shares of common stock through secondary offerings.
Alan Marcus, a shareholder of J.C. Penney Company, Inc. (NYSE:JCP), sued the retailer for its surprise decision to offer over $810 million in shares leading to a substantial drop in its share price. The shareholder accused the retailer of knowing it did not have enough liquidity to get through the holiday season without raising new capital, and alleged that the retailer concealed this knowledge so as not to raise concern among vendors. Marcus said that when the truth became known, investors started hammering the retailer’s stock.
Kyle Bass’s sale
Earlier this week, the stock price of the beleaguered department store chain declined on a report that Hayman Capital Management L.P., the hedge fund headed by Kyle Bass, sold its stake in the company.
Kyle Bass was one of the hedge fund managers who invested in J.C. Penney when Bill Ackman of Pershing Square Capital Management, then the largest shareholder of J.C. Penney Company, Inc. (NYSE:JCP), exited his position in the company. Back then, Bass acquired a 5.2% stake or 11.4 million shares, which made him one of the largest shareholders of the company.
Recently, the stock price of J.C. Penney Company, Inc. (NYSE:JCP) surged 5% to $10.62 after it reported that its same store sales increased by 10% in Novembers. Mike Ullman, chief executive officer of J.C. Penney exuded confidence about company’s performance over the Thanksgiving holiday weekend, particularly in light of the continued spending pressures on consumers.
However, following the disclosure on SEC inquiry, the retailer’s shares fell 3.8% to $8.51 yesterday in late trading. J.C. Penney Company, Inc. (NYSE:JCP)’s shares already had dropped 8.4% to $8.85 after hedge-fund manager J. Kyle Bass disclosed he sold his stake in the struggling retailer. The retailer’s shares have fallen 55% this year.