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Shoppers may have fled JCPenney, but buyout firms are fighting to get in.
The flailing department-store chain has been approached by at least three major private-equity firms over the past month, all of which have expressed interest in taking a major stake in the troubled retailer, The Post has learned.
It isn’t clear whether Penney, which is looking to raise as much as $1 billion to shore up its shaky finances, will give the firms a glimpse of its books, according to banking sources. However, sources said Penney has hired Blackstone Group to discuss potential deals.
Among the suitors is buyout giant KKR, which has been in contact with Penney about a possible deal for at least a month, sources said. Other PE firms including TPG, Leonard Green and Apollo Management are likely circling Penney, according to insiders.
The buyout giants will likely have to wait until the fall to cut any kind of deal, sources said. That’s because Penney’s board appears reluctant to sell an equity stake in the company given its current financial turmoil.
“It would only allow for a fire sale,” said one source, adding that buyers now are likely looking to take control of the retailer at a rock-bottom price.
To address its near-term cash crisis, Penney instead has been in talks with lenders to take on debt secured by its inventory, insiders said.
The retailer may cut a deal in the range of $500 million to start, according to a source briefed on the discussions.
“A key priority is to calm down the vendors,” said one industry source.
As reported by The Post this week, Penney is also weighing possible debt deals backed by its real-estate assets.
Penney is rattling the tin cup as it continues to hemorrhage cash following a botched turnaround bid by former CEO Ron Johnson, who was ousted on Monday. Penney didn’t respond to requests for comment.
Returning CEO Mike Ullman, who was replaced by Johnson in 2011 after seven years at the helm of Penney, has reached out to vendors this week to calm jitters about a potential cash crunch, sources said.
Some insiders fear Penney could be forced to soon tap its credit line, as plummeting sales continue to sap cash.
The crisis is an embarrassment for hedge-fund billionaire Bill Ackman, who sits on Penney’s board and is its largest shareholder.
Yesterday, Ackman said at a New York luncheon that Johnson was booted partly because the former Apple exec didn’t spend enough time at the retailer’s headquarters in Plano, Texas.
Last month, real-estate mogul Steve Roth abruptly sold nearly half of a 10-percent stake in Penney, sending the retailer’s shares tumbling.
Meanwhile, Penney faces a ruling today on whether it can sell a season’s worth of Martha Stewart-designed goods, which Macy’s has charged in a lawsuit are in violation of its own licensing agreement with Stewart.