Penney Enlists Blackstone to Help It Raise Money

April 11, 2013 J. C. Penney has hired the Blackstone Group to help it raise much-needed cash, people briefed on the matter said on Thursday, as the embattled retailer seeks a turnaround after replacing its chief executive.

The long-struggling company is seeking to revive its battered fortunes with greater urgency after the troubled 17-month tenure of Ron Johnson, the former head of Apple’s retail operations, as chief executive.

He was replaced on Monday by Myron E. Ullman III, his predecessor on the job, who will hold the position on an interim basis.

Penney formally retained Blackstone as an adviser after receiving unsolicited offers from several private equity firms to invest in the company, one of the people briefed on the matter said. A number of lenders also offered to provide debt financing.

Analysts have estimated that Penney could burn through as much as $1 billion this year. At the moment, the company favors raising new debt, given how low its stock trades now, the person added.

A J. C. Penney spokeswoman acknowledged the hiring of “outside advisers” to help the retailer assess its financial options. “This will continue as part of the work now under way to develop a game plan for the company going forward,” the spokeswoman said in a statement.

Once profitable, Penney has lost ground to rivals like Macy’s and Kohl’s, and is now deeply immersed in red ink.

And the future of an expansive — and expensive — overhaul that Mr. Johnson oversaw is now in question. William A. Ackman, the hedge fund manager who spearheaded his hiring, said at an investing conference on Thursday that the retailer would bring back coupon advertising, which was abandoned as part of a failed attempt to shake up pricing.

Penney must also deal with what analysts believe is a dwindling cash pile. While the company reported having $930 million in cash on its books as of Feb. 2, much of that is likely to be used to cover expenses in the wake of shrinking sales.

Analysts already expect the retailer to start drawing down on a $1.8 billion revolving line of credit this year.

For now, the company still has some financial breathing room. The company faces no significant debt maturities until 2015, when $200 million worth of bonds comes due.