J.C. Penney Co. Inc. has retained investment and advisory firm Blackstone Group to determine ways shore up its rapidly dwindling balance sheet, according to a source with knowledge of the arrangement.

This story first appeared in the April 12, 2013 issue of WWD. Subscribe Today.

The ailing department store, now once again under the leadership of chief executive officer Myron “Mike” Ullman 3rd, is scrambling after burning through more than $900 million in free cash flow last year as former ceo Ron Johnson tried to remake the chain. Penney’s is said to be looking for a private equity fund that would want to invest in the retailer.

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A company spokeswoman declined to comment on whether it had hired Blackstone and a spokesman for the advisory firm also declined comment.

But Penney’s has been getting some outside help lately.

“Over the last several months or more, we have engaged outside advisers to provide us with their expertise about how to best position the company from a financial standpoint during the company’s transformation,” the Penney’s spokeswoman said. “It is safe to assume this will continue as part of the work now under way as we develop a game plan for the company going forward.”

Penney’s has a $1.85 billion credit facility that it can draw on to fund operations as well as valuable real estate that it could sell and no debt coming due until 2015. But observers say one of Ullman’s most important first tasks is to reassure jittery vendors, investors and lenders about the company’s financial health.

William Ackman, the activist investor who helped install Johnson as ceo and supported his transformation efforts, told WWD Tuesday that he was sticking by the company. “We’re not going anywhere,” said Ackman, who controls 39.1 million shares of Penney’s, or 17.8 percent of those outstanding. “In fact, we’re going the other direction. We’re digging in.”

The Wall Street Journal first reported that Penney’s hired Blackstone on its Web site late Thursday. The Journal reported Penney’s was seeking to raise up to $1 billion.