JCP TL B 1L USD Corp

JC Penney Co Inc

Credit, Consumer


Publicly listed companies mentioned herein: JC Penney Co Inc (JCP)

Highlights

The presenter is long JC Penney Co’s JCP TL B 1L USD Corp in the high 80s, as he thinks the paper could benefit from either a liquidation scenario or moderate operational improvements. After a decade of management missteps, the company’s debt stack now consists of a $2B undrawn revolver, $2.1B first lien debt on its real estate assets, $400MM of second lien debt on its inventory, and then ~$1.4B in unsecured debt. The first lien TL trades at ~87 with a yield of ~11%. In the likely event of a liquidation, he expects that bond value to reach par. Yet, there is also the potential for margin expansion if the turnaround plan under new management works (this could lead to gains for TL holders as well).

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Idea Discussion

Commentor 1 - 2 weeks ago

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