J.C. Penney Secures Bankers’ Leeway to Raise Capital

J.C. Penney Co., the retailer backed by hedge-fund manager William Ackman, got clearance from lenders to sell billions of dollars in stock and debt if needed as it struggles to complete a turnaround.

Under changes to the company’s primary credit line, its banks affirmed that J.C. Penney can sell convertible preferred stock without triggering repayment provisions under the lending agreement, according to a Feb. 12 regulatory filing. The revisions also permit the department store chain to obtain as much as $1.75 billion in new loans by pledging real estate and other fixed assets as collateral, said Judah Frogel, an analyst at Covenant Review LLC in New York.