Penney repositioning capital

PLANO, Texas — J.C. Penney Company, Inc. is planning a major repositioning of its capital structure. The plan, which will utilize the entire net cash proceeds of approximately $3.5 billion from the sale of Eckerd drugstore operations and $1.1 billion of existing cash balances, consists of:
— Up to $3 billion for share repurchases, including up to $650 million contingent on the conversion of the company's 5 percent convertible subordinated notes due 2008 to common shares,
— $2.3 billion for the reduction of outstanding debt, and a
—$3.4 billion elimination of the present value of Eckerd lease obligations.

Allen Questrom, Chairman and CEO, said, "Our management team continues to focus on improving the customer experience as well as operating performance. The steps we are taking today reflect the confidence we have in our business and our commitment to further enhance shareholder value."

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