CIT to add surcharge to J.C. Penney vendor invoices - source
(Reuters) - Financier CIT Group Inc (CIT.N) plans to start charging J.C. Penney Co (JCP.N) vendors a 1.0 percent surcharge on all invoices, a person familiar with the matter said on Thursday.
Dow Jones, which earlier reported the news, said a surcharge would begin April 1 because the business lender feels the retailer presents a greater credit risk.
Dow Jones had also reported that the surcharge would be charged directly to Penney and not its vendors, though the source said that was not the case.
Penney declined to comment. CIT spokesman Curt Ritter said CIT does not comment on client or customer credit decisions.
J.C. Penney shares fell 1.7 percent to $15.39 on Thursday.
CIT and other finance companies, known in the industry as factors, provide short-term loans to supplier while they are waiting to be paid by those receiving their goods or services.
The news followed the department store chain's results for the first year of its transformation plan, which saw it burn through nearly $1 billion in cash as sales fell 25 percent.
Penney had $930 million in cash at the end of the fiscal year that ended in early February, less than the $1 billion finance chief Ken Hannah had projected in November.
Since the quarterly report, Standard & Poor's downgraded Penney's debt, while several Wall Street firms downgraded their rating in its shares.
At an investor conference earlier this week, Hannah sought to reassure Wall Street. In a note on Thursday, Carol Levenson, an analyst for Gimme Credit, which recommends selling Penney debt, faulted Hannah for not saying whether Penney could fund its transformation with cash from operations.
(eporting by Dhanya Skariachan and Phil Wahba; editing by John Wallace)