J.C. Penney Company Inc. (NYSE:JCP) needs some extra cash and is said to be in talks with Wells Fargo & Co (NYSE:WFC) to get it.
The news comes one day after a Manhattan court ruled in favor of the 111-year-old Plano, Texas-based department store chain’s battle with Macy's Inc. (NYSE:M) over the sale of some Martha Stewart products. The company also said two top executives have resigned. They were identified in a company regulatory filing as chief operating officer, Michael Kramer, and chief talent officer, Daniel Walker.
Penney is seeking a $500 million, five-year loan to shore up its liquidity as it tries to rebound from last year’s dismal attempt to reinvent itself as a hipper brand, under the direction of former Apple retail whiz, Ron Johnson, who was let go on April 8. The company said earlier this week it was tapping its $850 million line of credit to stock up its newly renovated departments. It needs more money to complete renovations started by Johnson.
Private equity firm TPG's specialty lending arm and Gordon Brothers Group, an investment firm that sometimes finances troubled retailers, are among the lenders involved in the talks, unidentified sources, who spoke to the Wall Street Journal, said. Blackstone Group LP (NYSE:BX) and Centerview Partners are advising Penney on fundraising options.
The company will use accounts receivables, inventory and intellectual property as collateral, and it might float shares for a minority stake to further bolster cash flow.
Meanwhile, a court ruled on Thursday that the company could sell certain Martha Stewart branded products, despite objections from Macy’s, which has an exclusive deal with New York-based Martha Stewart Living Omnimedia Inc. (NYSE:MSO).
The court ruled that Penney could move ahead with selling bedding under the JCP Everyday label, but it can't use the Martha Stewart logo in the merchandise and marketing. Macy’s said in a statement that the court’s decision makes it clear that “the JCP Everyday product cannot be associated with the Martha Stewart name in any way.”
The Cincinnati-based retailer has vowed to continue to fight against any sale of Martha Stewart goods at Penney. The dispute underscores a relatively recent trend, where retailers, seeking to distinguish themselves, secure exclusive deals with suppliers.
In this case, Macy’s has said it is also opposed to any relationship between Penney and Martha Stewart, even if the retailer is prevented from using the Martha Stewart logo in its merchandising.
Angelo Young is a general assignment business reporter who joined IBTimes in April 2012. Much of his career has been behind the scenes as a copy editor, assignment editor and...