Perry Capital, the hedge fund headed by Richard Perry, disclosed that it owns 16,000,000 shares or a 7.26% stake in the embattled department store chain J.C. Penney Company (NYSE:JCP), based on its 13D filing with the Securities and Exchange Commission (SEC) on Friday, August 9.
The regulatory filing showed that Perry Capital initially acquired 191,618 shares of J.C. Penney Company (NYSE:JCP) at around $17.69 per share last June 12. The hedge fund further increased its stockholding in the company until July 22.
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The hedge fund also sent a letter to the board of directors of JC Penney Company (NYSE:JCP) urging the company to “take immediate and proactive steps” to enhance its financial and operational management.
Perry Capital emphasized to the leadership of the department store chain that the creditors and shareholders are increasingly losing their confidence in JC Penney Company (NYSE:JCP) based on the recent significant decline of its stock price and bond prices.
“This market reaction is particularly alarming given the company’s meaningful improvement in liquidity following its $2.25 billion term loan financing,” according to the hedge fund.
Perry Capital urges Questrom appointment at J.C. Penney Company (NYSE:JCP)
In addition, Perry Capital also expressed its support to the return of Allen Questrom and Ken Hicks in the board of directors of J.C. Penney Company (NYSE:JCP). Furthermore, the hedge fund also said it appreciates Mike Ullman’s willingness to serve as interim CEO of the department store chain amid this critical situation.
Perry Capital emphasized, “We believe that immediately appointing Allen Questrom Chairman of the Board and Ken Hicks CEO is imperative at this juncture, and we anticipate that the company’s various constituents would be highly supportive of such a change. In the words of Citigroup retail analyst Deborah Weinswig in a publicly available research note: “Questrom + Hicks = Dream Team” (Dear Board of Directors, Time is of the Essence! August 9, 2013).”
Yesterday, Bill Ackman of Pershing Square Capital urged the board of directors of J.C. Penney Company (NYSE:JCP) to search for a new CEO to replace Mike Ullman within 30 to 45 days. It was also reported that Questrom agreed to return to the company as chairman under appropriate conditions. He will not return to the company under “hostile circumstances.”
On the other hand, the company’s board was enraged by Ackman’s demand to replace Ullman as CEO of J.C. Penney Company (NYSE:JCP). According to the board, removing Ullman is “disruptive and counterproductive” given the fact that it is just four months since he assumed his position.
H/T Market Folly