J.C. Penney Co. says it has drawn $850 million from its $1.85 billion revolving credit line a week after Penney fired CEO Ron Johnson after 17 months on the job.
Struggling retailer J.C. Penney is adopting a plan to prevent a takeover attempt just two days after reporting its sixth straight quarter of big losses and steep revenue declines.
It's the second time in recent years that the company has put into place a so-called "poison pill" plan.
In October 2010 J.C. Penney enacted the defense after activist investor William Ackman of Pershing Square and Vornado Square Management, chaired by Steve Roth, snapped up large stakes.
The company eventually put both men on its board, a decision that ended badly last week.
Ackman resigned from the board after lashing out at other directors publicly. The two sides hammered out an agreement that will allow Ackman to unload his J.C. Penney stake. Roth is still on the board.
J.C. Penney said there is no current attempt to take over the company. The plan announced Thursday can be put into effect if an individual or an entity acquired 10 percent or more of the company's outstanding stock.
The corporate defense strategy allows existing shareholders to buy more shares at a very low price if that occurs.
J.C. Penney said that the plan does not include "certain affiliates of Pershing Square Capital Management, L.P. or certain affiliates of Vornado Realty Trust so long as such party's beneficial ownership is permitted under such party's letter agreements with the company."
The retailer is trying to survive a botched turnaround strategy by ousted CEO Ron Johnson. It brought Mike Ullman to the top post in April, after he occupied the position from 2004 to 2011. Ullman has been bringing back coupons, frequent sales events and basic merchandise like khakis and jeans that Johnson eliminated in a failed attempt to attract hipper, more affluent shoppers.
J.C. Penney amassed nearly a billion dollars in losses and its revenue dropped 25 percent for the fiscal year that ended Feb. 2 in the first year of Johnson's turnaround strategy.
Under Ullman's leadership, J.C. Penney is bringing back store label brands like St. John's Bay that were eliminated by Johnson. The company also is working to restage the home departments in the stores where new designers like Jonathan Adler and Michael Graves were added.
J.C. Penney said that its "poison pill" will be effective until Aug. 20, 2014, unless rights are redeemed or exchanged for shares of its common stock on an earlier date.
The retailer's stock added 12 cents to $13.45 in premarket trading.