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J.C. Penney Shares Get No Help from Secondary Offering

JCP-logo
courtesy J.C. Penney Co. Inc.
Before markets opened on Friday morning, J.C. Penney Co. Inc. (NYSE: JCP) priced a secondary offering of 84 million shares of common stock at $9.65 a share, about 7.4% below last night’s closing price of $10.42 and not much above the stock’s 52-week low of $9.52. The nominal value of the offering is $810.6 million.

The sole underwriter of the offering is Goldman Sachs & Co., which has a 30-day option to purchase an additional 12.6 million shares. That is the same company that downgraded the stock to Underperform earlier this week.

Apparently J.C. Penney executives think investors believe all that happy talk the company put out yesterday about showing improved sales in the third and fourth quarters of the fiscal year. The company also said it did not need any more cash this year. Maybe the company will invest the cash in an index fund to pump up its profits for the next couple of quarters.

All those encouraging words from J.C. Penney management yesterday pulled the shares up about 13% at one point during the day, offsetting most of the 15% drop from the day before. Shares have dropped more than 22% in the past five days and will lose even more today.

In premarket trading Friday morning, shares are down 7.4%, at $9.65 in a 52-week range of $9.52 to $27.00.

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