US: JC Penney secures $1.75bn loan
The loan will be used to fund ongoing working capital requirements and other general corporate purposes
Ailing retailer JC Penney has secured a US$1.75bn loan commitment from Goldman Sachs, two weeks after it drew $850m from its revolving credit facility.
The five-year loan facility, which is secured by the company's real estate and other assets, will be used to fund ongoing working capital requirements and other general corporate purposes.
"This loan facility is an important component of our strategic plan to strengthen the company's financial position," said chief financial officer Ken Hannah. "Together with our revolving credit facility, this will give us the financial strength we need to meet our current funding requirements and build toward a successful future."
The news comes after Plano, Texas-based company drew down $850m on its $1.85bn committed revolving credit facility for operating, working capital and capital expenditure needs on 15 April.
According to one report earlier this month, if the company runs through cash at the rate it has over the past 12 months, it will have no money on the balance sheet by sometime this summer. Furthermore, if newly-appointed CEO Ullman can't stop the bleeding, JC Penney will be bankrupt by Labour Day (2 September).
Last month, the struggling department store retailer saw its losses widen to $427m after sales and traffic fell below expectations amid efforts to turn around the business. In addition, former chief executive officer Ron Johnson was ousted earlier this month after his low pricing model failed to gain traction with consumers.
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