J.C. Penney Rumored to Be Seeking Cash: Report

NEW YORK (TheStreet) - J.C. Penney (JCP) is rumored to be looking for more cash, according to a Bloomberg article.

The Plano, Texas-based department store, struggling to jump start a turnaround under the direction of CEO Mike Ullman, is said to be in discussions with hedge funds and other investors under the advisement of Goldman Sachs (GS) about additional fundraising options. Included in the range of possibilities is the company borrowing against its real estate holdings, Bloomberg said. J.C. Penney's owned and ground-leased real estate is valued at $4.08 billion, said Bloomberg, citing the company's May investor presentation.Shares fell 1.4% to $12.96 on Friday. The stock fell an additional 1.2% at last check.

Last month, J.C. Penney reported a worse-than-expected net loss of $586 million, or $2.66 a share, in a second quarter chock full of extraordinary charges that pulled the number down. Net sales slumped 12% year over year and gross margin fell to 29.6% in the quarter. The company said it plans to end the year with $1.5 billion in excess liquidity.

The dismal earnings results followed a very public battle with Pershing Square's Bill Ackman who sought to shake things up at board and executive level to speed up J.C. Penney's turnaround. Ultimately, Ackman lost that battle and resigned his board seat. Ackman announced on Aug. 27 plans to sell his entire 18% stake in J.C. Penney. In the wake of the activist investor headache, J.C. Penney recently adopted a stockholder rights plan in hopes to make it more difficult for anyone to acquire or own more than 10% of the company. Separately, Vornado Realty Trust (VNO) said Friday that it sold its remaining stake in J.C. Penney for $174 million. In a Securities and Exchange Commission filing, the company said that on Thursday, it sold all 13.4 million common shares in a block trade to Citigroup Global Markets, at a price of $13 per share. Prior to the sale (announced last week), Vornado owned 13.4 million shares, or 6.1% of J.C. Penney's stock, worth about $185 million.J.C. Penney has not yet responded to TheStreet's request for comment on this article. -- Written by Laurie Kulikowski in New York.