Myron “Mike” Ullman 3rd isn’t wasting any time trying to get J.C. Penney Co. Inc. back on track.

This story first appeared in the April 16, 2013 issue of WWD. Subscribe Today.

A week after Ullman replaced Ron Johnson as the struggling retailer’s chief executive officer, Penney’s unveiled plans to “enhance” its financial flexibility and position by drawing funds from its credit line. The move follows Penney’s decision to hire Blackstone Group to determine ways to shore up its finances. It also recently hired Centerview Partners to advise on ways to raise cash.

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Penney’s said it has borrowed $850 million of its $1.85 billion committed revolving credit facility, at an annual 5.25 percent interest rate. The borrowing has a maturity date of April 4, 2014.

For industry experts, the news was largely expected and counted more as a preemptive strike against upcoming volatility for the retailer’s languishing business.

Citi analyst Deborah Weinswig said the amount Penney’s drew was “more than expected” but she was “pleased to learn that JCP drew more than its current funding needs.”

“We still believe that a longer-term financing solution is necessary,” she said, noting that Penney’s is likely to burn through $722 million in cash in the first quarter alone. “In our view, JCP may ultimately need to raise $1 billion in total cash this year to buy time to stabilize the business.”

Over the course of the year, the industry has watched as Penney’s has spent more than $900 million in free cash flow in order to reinvent its retail strategy under Johnson.

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The retailer said Monday that it would use the $850 million to fund working capital requirements and capital expenditures, which includes the replenishment of inventory levels in anticipation of the completion of its newly renovated home departments, set to open next month.

“Earlier this year, we increased our revolving credit facility in anticipation of operating, working capital and capital expenditure needs, especially during the first half of the year,” said Penney’s chief financial officer Ken Hannah. “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.”

Market sources told WWD that they expect to hear from Ullman sooner rather than later regarding his plans for turning around the company.

“We’re waiting for first-quarter results,” said a credit analyst, who spoke on condition of anonymity. “We expect a significant loss for the quarter.”

The analyst expects a negative reaction from vendors and factors regarding first-quarter results, which “could have” some impact on access to credit.

Maggie Taylor, vice president, senior credit officer at Moody’s, said that based on her firm’s estimates, she could see Penney’s needing to borrow more money in the third quarter, but she declined to provide a figure.

“It depends on if Penney’s can raise money in the capital markets,” said Taylor, who has a ‘B3’ negative outlook on the retailer. “Because of how the credit metrics are currently, they have a lot of hurdles in front of them.”

The biggest hurdle — the “$100 million question” — is whether Penney’s can “win back the consumer,” Taylor noted.

That may be a tall order, the analyst said, considering the difficult macroeconomic environment.

“The growth rate is slower,” she said, pointing to flagging retail sales. “It’s a slow-growing retail environment.”