J.C. Penney has begun a public offering of 84 million shares, reports Bloomberg.
Shares of the troubled department store chain are down by around 5% following the news.
Investors punished the stock on Wednesday after a Goldman Sachs published an extremely bearish report on the company.
“In our view, a combination of weak fundamentals, inventory rebuilding, and an underperforming home department will likely challenge J.C. Penney’s liquidity levels in 3Q,” said Goldman Sachs credit analyst Kristen McDuffy. “In order to safeguard against a potentially poor 4Q holiday season, it is likely that management will look to build a bigger liquidity buffer, as has been suggested by recent press reports. Although we believe this would be a prudent measure for the company, given our expectation for new capital to come in the form of additional debt (rather than equity), we believe this will be a negative catalyst for creditors.”
McDuffy recommended buying credit default swaps (CDS) on the the company.
Here’s the after-hours action via MarketWatch.com.