J C Penney Company Inc (NYSE:JCP) Pushes Ahead With Lucrative ‘Cash Tender’


Dallas, Texas 09/12/2014 (FINANCIALSTRENDS) – J C Penney Company Inc (NYSE:JCP) latest offer of ‘cash tender’ has received a research note by R.W. Pressprich & Co. plunging the stock into gains-mode at the stock markets on Thursday. The gains, as of September 11, were 3% and the share prices poised at $11.14 per share.

According to the analyst firm’s Steven Ruggiero the current offer is viewed as a positive offer and is expected to boost the company’s overall gains through the offer. He has now rated J C Penney Company Inc. (NYSE:JCP) a ‘Buy’ due to the unsecured notes and simultaneously ranked it ‘Market Perform’ in terms of the shares the company holds.

Unsecured Notes are cash equivalent

As Ruggiero in his detailed report explains that the retail chain offer is priced between low to mid-8% range. He adds that, the notes, if priced below 7% will bring high-yield in relative value.  He suggested that lowered pricing would also lead to an increase in the size of the deal between $500 million and nearer $550 million.

Technical aspects of the tender offer, according to Ruggiero, even if refinanced, will not have any EPS accretion. He added that, “We would expect limited if any reductions in JCP’s interest expense given our expectations for pricing. The company benefits, however, from reduced near-term debt maturities as they would be pushed out beyond 2017 should the tender offer be completed.”

Increase in tender Issue

Besides, J C Penney Company Inc (NYSE:JCP) management has also indicated that it could propose further increase in the offer size.

Citing a scenario where the company can extend the maximum offer, Ruggerio stated that, it could place all of its $200 million Senior Unsecured Notes which are due in 2015 as well as the 2016 and 2017 notes of $200 million, $100 million and $285 million respectively offering investors high-value, less-risk laced returns.