Perry Corp. Cuts Stake In J.C. Penney

(RTTNews) - Hedge fund Perry Corp. has cut its stake in J.C. Penney Co., Inc. (JCP) to 3.28 percent as the beleaguered department store chain announced plans last Thursday to raise up to $1 billion in new capital.

In a filing with the Securities and Exchange Commission, New York-based Perry Capital said Monday that it now owns 10 million shares of J.C. Penney, representing a 3.28 percent stake. The hedge fund, run by Richard Perry, had earlier held 19 million shares of J.C. Penney shares as of August 30, representing an 8.62 percent stake at that time.

Shares of J.C. Penney tumbled almost 15 percent last Wednesday to their lowest close in nearly 13 years, on fresh liquidity concerns about the Plano, Texas-based department store chain.

According to media reports, analysts at Goldman Sachs Group Inc. (GS) said that J.C. Penney's liquidity levels will likely be strained in the third quarter and initiated coverage of the company's stock with an "underperform" rating.

A day later, on Thursday, J.C. Penney said it commenced an underwritten public offering of 84 million shares of its common stock priced at $9.65 per share. The company intends to use the net proceeds from the offering for general corporate purposes.

The company has granted the underwriters a 30-day option to purchase up to an additional 12.6 million shares of common stock. The offering is expected to close on Tuesday, October 1, 2013.

J.C. Penney's plan to raise capital came close on the heels of two of its largest stake holders exiting their respective stakes in the company.

New York-based real estate investment trust Vornado Realty Trust (VNO) exited its remaining stake in J.C. Penney earlier in September, a week after its Chairman and CEO Steven Roth's resignation from J.C. Penney's board. Vornado had a 6.1 percent stake in J.C. Penney.

J.C. Penney's largest shareholder, billionaire William Ackman's hedge fund Pershing Square Capital Management, L.P., had in mid-August exited its entire 18 percent stake after failing in an attempt to install a new CEO at the retailer.

JCP closed Monday's regular trading session at $8.81, down $0.24 or 2.71 percent on a volume of 61.35 million shares. In after-hours, the stock further declined $0.03 or 0.28 percent to $8.78.