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J. C. Penney Company, Inc. Message Board

  • sach_bhardwaj sach_bhardwaj Apr 30, 2013 2:03 PM Flag

    Moody's Cuts J.C. Penney Further Into Junk - 16 minutes ago

    Moody's Investors Service lowered J.C. Penney Co.'s (JCP) junk-level rating a notch and left the door open for a further downgrade, citing the retailer's recent arrangement to increase debt.
    The credit ratings company cut J.C. Penney's corporate family rating to Caa1--or seven steps into junk territory--from B3. The outlook remains negative.
    J.C. Penney mortgaged its headquarters and surrounding land to secure a $1.75 billion loan arranged by investment bank Goldman Sachs Group Inc. (GS). Also included as collateral are nine distribution centers, intellectual property and additional owned and/or ground leased property with a total value of not less than $400 million, according to a regulatory filing late Monday.
    Although the term loan bolsters the retailer's liquidity, Moody's said it won't solve J.C. Penney's longer-term performance concerns or reduce the anticipated cash-burn level over the next 12 months.
    The firm also said the term loan greatly will weaken J.C. Penney's capital structure "at a time when its earnings are at precarious levels."

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