the only thing I am concerned about is....
management can say one thing while reality is different.
radioshack CEO says they are on track on their turnaround plan, but it looks more like on track to bankruptcy.
JCP does not look like the case and I think this will easily go back to the low teens within the next 12 months.
Actually, in JCP's case its more like getting a line of credit with lower interest rates to pay off all your high interest credit card bills. If the refinancing can buy them time before they start generating positive cash flow then I don't see a problem here. The actual problem is whether or not JCP can generate positive cash flow. Today's news actually back fired on them because all it did was remind investors that they have a huge debt.
I rather this version of JCP's outlook...
•J.C. Penney has achieved a remarkable turnaround in the last four months on the back of smart strategies.
•Penney should be able to continue its comeback as it is focusing on cutting costs and bringing more customers to its stores by revamping stores and improving assortments.
•Penney's PEG ratio is the best among peers and better than the industry average by a big margin, signifying the successful turnaround.
Though I haven't taken the time to review, in detail, what JCP has done, it appears they have established a borrowing of $500 million for a multi-year term, and separated that amount from the revolving credit agreement. That suggests they expect that cash flows will be sufficient to keep the new revolver at zero, except during the holiday period. That coincides perfectly with their cash flow projection for 2014.
"And they pushed back the repay date, to give them more wiggle room."
That creditors/lenders has confidence of JCP's ability to recover--just need more time to execute its turnaround plan--is precisely the point!