Tomahawk, WI 9/30/2013 (BasicsMedia) – J.C. Penney Company, Inc. (NYSE:JCP) has established its presence around 49 states in the U.S. The company mostly operates departmental stores although there is no denying that these have been struggling quite a lot of late. It mostly operates as a seller of merchandise and services, which it avails to consumers using its department stores and its Internet site, It has now been reported that the company is selling close to 84 million of its shares and this has caused a lot of excitement. But is this enough to turn the fortune of this company around?

 JCP to Hire Goldman Sachs

 JCP has stated that the company it will hire to act as the underwriter when it sells its 84 million shares is Goldman Sachs. Moreover, it has also allowed Goldman Sachs the rights to purchase some 12.6 million of these shares within a 30-day period. The company’s decision to hire Goldman Sachs is quite interesting bearing in mind that the latter recently declared that JCP’s stock was underperforming. This is probably one of the reasons why JCP hired Goldman to see if there is anything the investment banker can do to help it come out of its many problems.

 JCP says that it is doing this so as to raise funds it needs to improve its general corporate functions. The company has been struggling to perform primarily because it has been unable to improve its inventory. This is the news that Goldman Sachs has declared on the stock. Perhaps as a result of hiring Goldman, JCP is hopping that the former can help enlighten it on how to undertake such a rebuilding exercise. Goldman has stated that the decision by JCP’s former CEO, Ron Johnson, to remove the items which its customers loved, worked against it.

 JCP Needs Cash to Replace Non-Performing Brands

JCP has stated that it is willing to replace a few of the brands which aren’t performing according to expectations. However, it can’t do this unless it starts by raising enough cash. If it succeeds to sell the 84 million shares it has put on offer, there is a chance that it could raise the money it wants to in order to improve or rebuild its inventory. The company needs close to $300 million, or more, if it intends to raise the cash it needs for rebuilding its inventory. This is money it only needs for the third quarter of 2013, which will be much higher than this for an entire fiscal year.

 However, the minimum amount of money which JCP needs in order to be in a good position in terms of its private label inventories, is more than $500 million. In terms of cash threshold, this is the minimum needed by JCP, according to Goldman Sachs. Some analysts are convinced that the company still has enough liquidity for the remainder of 2013. However, if the company burns more cash than it has estimated, it will need to look for new ways of raising more cash. At this moment, I think that the 84 million shares may just be enough, but if it is utilized properly.

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