A chaotic couple of weeks for JCPenney and Bill Ackman looks to be coming to a close as the company disclosed that it has entered into a Registration Rights Agreement with the former board member that will allow him to sell off his 17.7 percent stake in the retailer.
The Securities and Exchange Commission filing allows Ackman to make up to four requests to the retailer to register the sale of his restricted common stock. The agreement will terminate when he owns less than 5 percent of the company's stock.
Ackman has not said publicly that he plans to sell his share, but the stock plummeted upon the announcement that he would resign his position on the board earlier this week, based on the assumption that he would sell. He is restricted from selling the stock until Penney releases its second-quarter results this Tuesday.
"It is paving the way for (Ackman's Pershing Square hedge fund) to sell the stock if they choose to do so," Imperial Capital analyst Mary Ross Gilbert said of the filing.
As it stands, Pershing Square would lose more than $300 million on the investment at the current price.
The agreement gives Ackman an out and brings a possible end to the very public battle between him and the JCPenney board. Of course, it does little to help the struggling retail chain whose stock has fallen 30 percent so far this year. The sale of so much of the company doesn't seem likely to allay fears on Wall Street, but other investors, including Ackman's rival George Soros, have expressed interest in growing their shares.
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