April 18 J.C. Penney Co Inc is speaking with Wells Fargo & Co and others, including parties that invest in troubled companies, about a new loan to help it buttress its cash reserves, the Wall Street Journal reported on Thursday, citing people familiar with the matter.
Other parties involved in talks about providing funds for the loan include a lending unit of private equity firm TPG and Gordon Brothers Group, an investment firm that sometimes finances troubled retailers, those people said, according to the paper.
Penney, Wells Fargo, TPG and Gordon Brothers declined to comment.
Also on Thursday, the troubled retailer said its chief operating officer, Michael Kramer, and chief talent officer, Daniel Walker, left the company, confirming earlier press reports. Both executives had worked at Apple Inc with ousted CEO Ron Johnson.
Kramer will receive a lump sum cash payment of $2.14 million.
The loan - in the amount of $500 million - would come due in five years and be backed by Penney's inventory, accounts receivable and intellectual property, the people said, according to the report.
Penney's merchandise inventory decreased by $575 million, or 19.7 percent, to $2.34 billion at the end of fiscal 2012 as the company worked on efforts such as setting up specialized shops within its large department stores.
Discussions were active on Thursday and the group's membership was still fluid, but a deal could be reached within days, the people said, according to the Journal.
On Monday, Penney said it had borrowed $850 million from its $1.85 billion revolving credit facility as it revamps its business strategy following the departure of Chief Executive Ron Johnson. Under Johnson, Penney tried to eliminate coupons and turned off its core shoppers, leading to steep declines in revenue.
Last week, Penney brought back Johnson's predecessor, Myron Ullman, who is expected to return to the chain's old pricing strategy, which relied heavily on coupons to draw in shoppers.
Separately on Thursday, a New York judge ruled that Penney can sell Martha Stewart goods under a "JCP Everyday" label, at least until an appeal by Macy's Inc is decided.
Macy's claims it has the exclusive right to sell Martha Stewart goods in categories such as bedding, bath and tableware, under a 2006 agreement that runs to 2018. It sued Penney and Stewart's company, Martha Stewart Living Omnimedia, after they announced a partnership in December 2011.
Shares of Penney were up 3.2 percent at $15.23 in afternoon trading.