(Adds details on poison pill, share activity)
By Phil Wahba and Siddharth Cavale
Jan 28 J.C. Penney Co Inc said on
Tuesday it extended its poison pill until 2017, and lowered the
threshold at which it would dilute the holdings of any
shareholder, to prevent a takeover of the department store
The retailer lowered the trigger of its shareholder rights
plan, as poison pills are formally known, to 4.9 percent from 10
percent, saying that would "reduce the likelihood" of an
That will preserve its ability to use its net operating loss
carryforwards to offset future profits and lower its tax bills
as allowed under the U.S. tax code, it said.
Penney said it has $2 billion in net operating loss
Penney, struggling to revive sales after a disastrous
attempt in 2012 to move upmarket, in August put in place a
one-year "poison pill" aimed at thwarting any "abusive takeover"
attempts by limiting any single investor's holdings to 10
percent. At the time, several hedge funds had taken large stakes
in the retailer.
Penney said that current shareholders owning more than 4.9
percent of shares will only trigger the poison pill if they
increase their stake.
State Street Global Advisors, Soros Fund Management and The
Vanguard Group are the only investors right now with a stake
above the new threshold, according to Thomson Reuters data,
The poison pill, initially set to expire in August 2014,
will be valid until January 26, 2017 unless shareholder vote
against it at the annual meeting in May.
Wall Street analysts expect Penney to report a $1.86 billion
loss for the fiscal year ending this week, according to Thomson
Reuters I/B/E/S. It will report earnings in late February.
Penney shares rose 0.3 percent to $6.53 in early trading on
Tuesday. In October, they hit $6.24, their lowest since 1981.
(Reporting by Phil Wahba in New York and Siddharth Cavale in
Bangalore; Editing by Saumyadeb Chakrabarty and Nick Zieminski)