In December last year, Alan Marcus, a shareholder of J.C. Penney Company, Inc. (NYSE:JCP), went to court against the company for its abrupt announcement in September of a common stock offering amounting over $810M, alleging it kept the reality of its finances under wraps.
Shareholders up in arms
The fact of the offering triggered a sell-off in the shares of J.C. Penney Company, Inc. (NYSE:JCP) as investors panicked over its dilutive effect, and worried that the company’s liquidity and cash position were not as good as what it had earlier indicated.
The issue received widespread media attention and criticism, with calls for an investigation by the SEC.
The SEC quizzes J.C. Penney
The SEC did, in fact, institute an inquiry into the matter, and the company disclosed the fact in a filing as follows.
Page 39
“Other Legal Proceedings
On October 7, 2013, the Company received a letter of inquiry from the Securities and Exchange Commission 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 announced on September 26, 2013. The Company is cooperating with the Securities and Exchange Commission in regards to its inquiry, including providing material requested by the Securities and Exchange Commission.”
The announcement of the inquiry led to a fall of nearly 9% in the stock of J.C. Penney Company, Inc. (NYSE:JCP).
J.C. Penney on a roll
Yesterday, the company announced a beat on earnings by reporting Q4 EPS of (-$0.68) against street consensus of (-$0.85). Special items such as a tax benefit and profit on asset sales helped the struggling retailer to report a net profit of $35M. Significantly, sales at comparable stores were up 2% for the quarter.
The result sparked a bull run on the stock yesterday in after-hours trading, when it leaped 16%.
J.C. Penney Company, Inc. (NYSE:JCP) is obviously on a roll, because it also disclosed in its quarterly filing that the SEC had called off its October investigation into its finances and public offer.
“Item 8.01
Other Events.
On October 7, 2013, the Company received a letter of inquiry from the Securities and Exchange Commission (the “SEC”) 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 announced on September 26, 2013. On February 13, 2014, the Company received a Termination Letter from the SEC’s Fort Worth office stating that it had concluded its investigation and was not recommending SEC action.”
Stock charging up today in pre-market trading
J.C. Penney Company, Inc. (NYSE:JCP) is currently trading pre-market at $7.30, up 22.48%, as investors appear to be cheering the quarterly result, and perhaps, the fact of the demise of the SEC investigation.
