J.C. Penney Company, Inc. (NYSE:JCP) is facing an inquiry by the Securities and Exchange Commission, or SEC, into the company’s liquidity, debt and other finances, the ailing retailer revealed in a regulatory filing late on Thursday.
Plano, Texas-based J.C. Penney has been trying to engineer a rebound and win back customers after reporting a loss of more than $1 billion in the first half of 2013, coupled with a bleak outlook for the second half. The company’s shares, which have also been steadily dropping over the last two years, lost 8.39 percent on close to reach $8.85 in Thursday’s trading on the New York Stock Exchange.
The stock tumbled following reports that Hayman Capital Management LP -- a hedge fund, which made millions by betting against the subprime mortgage market before the onset of the financial crisis -- offloaded all its shares in J.C. Penney.
The Dallas-based hedge fund’s manager, Kyle Bass, had said in October that his firm was “not investing in a turnaround” of J.C. Penney, but added that he believed in the retailer’s ability to bring back stability. Hayman Capital, which disclosed in September that it held 11.4 million shares of J.C. Penney, accounting for a 5.2 percent stake, said it continues to hold the retail chain’s debt, Bloomberg reported on Thursday.
The SEC requested information on J.C. Penney’s liquidity, cash position, debt, equity financing and a common-stock offering announced in September, the company said, according to Associated Press. The retailer said it is cooperating with the inquiry and is providing the information required by the regulator.
Mike Ullman, who came back to head J.C. Penney in April for a second term after being replaced by Ron Johnson in 2011, has been trying to draw younger and richer customers, while reinstating popular sales events and brands that Johnson had scrapped.
The company has raised about $3.9 billion in debt and share offerings since Ullman took over to redirect the company, according to a Bloomberg report, even as analysts expect J.C. Penney to perform better in the fourth quarter, although massive discounts offered during the holiday shopping season are expected to eat into the retailer's profitability.
J.C. Penney’s shares lost 3.84 percent to reach $8.51 in after-hours trading on the New York Stock Exchange.