J.C. Penney looking to raise some $800 million from offering

Plano, Texas – Shares of J.C. Penney Company took a beating on Friday after the retailer priced its $932 million share sale at a 7.4% discount and detailed its shrinking cash position.  

Penney priced its sale of 84 million shares at $9.65, down from a closing price of $10.42 on Thursday.

The new offering should raise more than $800 million. According to Reuters, J.C. Penney, which is valued at $2.6 billion, had been considering issuing new stock shares as well as other unspecified alternatives.

Penney also disclosed in a regulatory filing that it anticipates having about $1.3 billion in cash or assets that can readily be converted to cash at year's end.  That excludes the net proceeds from the offering.

Penney’s stock on Wednesday plunged to a 13-year low of $10.12 at the end of trading. The stock fell to $9.94, the lowest since January 2001, before recovering up to $10.12. Industry experts credited the 15% plunge to reports that the chain did not have a good back-to-school season, with sales falling at the end August and into September. Investors have also been made wary by recent reports have indicated that the chain needs to raise more cash.

In a research note on Penney’s credit, Goldman Sachs raised concerns about the chain’s sales. "We expect 3Q and 4Q to be difficult, with comp store sales likely showing a slower-than-expected improvement,” Goldman said.

The offering is expected to close on Oct. 1, 2013, subject to certain customary conditions. Penney has granted the underwriters a 30-day option to purchase up to an additional 12.6 million shares of common stock.