Retailer JCPenney Cuts Debt Through Credit-Card Receivables Sale

Troubled retailer JCPenney Co. Inc. has sold its credit-card receivables operation to GE Capital, reducing its debt by approximately $3.8 billion to $4 billion. As part of the deal, GE Capital will provide private label credit-card services to JCPenney for the next 10 years. The sale was expected since May, when JCPenney announced it was looking to sell the credit-card business to improve its bottom line and prepare for a stock offering of its Eckerd drugstore business. Investors reacted positively to the news, sending JCPenney's stock up $1.18 3/4 to $31.18 3/4 on the New York Stock Exchange.

Key Takeaways:

• JCPenney has sold its credit-card receivables operation to GE Capital, reducing its debt by approximately $3.8 billion to $4 billion.
• The deal includes a 10-year agreement for GE Capital to provide private label credit-card services to JCPenney.
• JCPenney had announced plans to sell the credit-card business in May to boost its bottom line and prepare for a stock offering of its Eckerd drugstore business.
• Investors responded positively to the news, with JCPenney's stock increasing by $1.18 3/4 to $31.18 3/4 on the New York Stock Exchange.
• The sale is part of JCPenney's efforts to improve its financial health and position itself for future growth.

Statistics:

• JCPenney's debt reduction: approximately $3.8 billion to $4 billion.
• Length of GE Capital's private label credit-card services agreement: 10 years.
• Increase in JCPenney's stock price: $1.18 3/4 to $31.18 3/4.

Sources:

• USA Today, "JCPenney to sell credit-card business" (exact date not specified)