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J.C. Penney draws down $850 million in funding

The sign at the entrance of a J.C. Penney store is pictured in Arcadia, California March 1, 2013. REUTERS/Mario Anzuoni
The sign at the entrance of a J.C. Penney store is pictured in Arcadia, California March 1, 2013. REUTERS/Mario Anzuoni

(Reuters) - J.C. Penney Co Inc said on Monday that it had drawn $850 million out of a $1.85 billion revolving credit facility to help buy inventory as it moves past a failed turnaround.

The retailer will use the proceeds to fund working capital needs and capital expenditures, including the replenishment of inventory ahead of the completion of its newly renovated home department next month.

"As we near completion of the home department transformation in over 500 stores, we have been undertaking and will continue to experience a significant inventory build and increase in capital expenditures," said Chief Financial Officer Ken Hannah.

The company also said it would continue to explore additional capital-raising alternatives with the help of its financial advisers.

Shares of Penney were up 0.5 percent at $14.69 in premarket trading.

(Reporting by Martinne Geller in New York; Editing by Gerald E. McCormick and Lisa Von Ahn)

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