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J. C. Penney Company, Inc. Message Board

  • techglass1 techglass1 Apr 26, 2013 6:04 PM Flag

    Why would you want to buy the equity when they are taking on all this debt.

    I would buy the debt only. The Enterprise value of a company is based on total market capitilization plus net Debt. The more debt they take on the less the value of the equity.Like Ackman Soros will be punished. The new Goldman debt will not be cheap. Buy the debt not the stock.

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    • The first loan is back by inventories. This second loan not yet signed is back by the real estates. These loans are usually rollover. The only debt that is really safe for investors are the early bonds like the 2015 not the later bonds. This new loan if signed will give JCP more time to get their act together.

      JCP has not officially release their first quarter earnings date but May 13 is the estimate. There is a shareholders meeting on May 17.

    • I don't get it either. The debt load (pre-Goldman) was costing the company $250 million a year to service. It is anticipated that JCP will use the Goldman loan to pay off the recent $850 million. But still....without customers, JCP is living on borrowed time and borrowed money.

      • 2 Replies to lancer2k
      • Basically the company has doubled it's debt load in the last 30 days - 1.75 billion and 850 million - - - - I think this is the Hail Mary I predicted - - they have to be totally right the first time - - they've bought some time, but in that time they have to not only return the customers you referenced, they have to have those customers be profitable enough to repay all this debt - - - - they just keep painting themselves further into the corner each time they eliminate an option. I still only see the fundamentals getting worse, for at a minimum, the rest of this year - - - if his plan works the holiday season could show signs of improvement in sales - - - - bottom line, look at the debt coming due in the next 5 years

      • agree with both of u but I went long this morning and will short this before earnings this company is in very bad trouble = bankrupt

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