After a dicey year, a $1.75 billion loan from Goldman Sachs assuaged the fears of some investors in JC Penney Co. After the company’s now-infamous CEO Ron Johnson was fired from the company in early April, to be replaced by former CEO Myron “Mike” Ullman, many investors were left eager to unload their stock.
Ullman, on the other hand, is left cleaning up the mess left by Johnson–losses of $1 billion in 2012, and sales down 25%. In April, Penney’s drew $850 million from its credit facility, which was considered an unusual, and highly risky move.
The Goldman loan, backed by the company’s own real estate and assets, can be used toward “general corporate purposes” and to cover 2013 bonds, but not all of the company’s many vendors will be paid promptly, or in full.
Still, chief financial officer Ken Hannah called the company’s credit facility “an important component of our strategic plan to strengthen [JC Penney’s] financial position.” He told Women’s Wear Daily that the Goldman loan will “give us the financial strength we need.”
Apparently, the loan has renewed at least some confidence in the struggling department store. Paul Trussell, analyst at Deutsche Bank, told WWD that concern about the company’s bankruptcy are “off the table for now.”