HOFFMAN ESTATES, IL—A week after announcing 103 additional; store closings across the Sears and Kmart brands, Sears Holdings Corp. (SHLD) on Wednesday announced a series of financial steps it's taking to enhance its liquidity and accelerate its return to profitability. Among other transactions, SHLD has raised $100 million in new financing via a term loan secured by ground leases, and is pursuing an additional $200 million in financing backed by the same collateral.

In addition, SHLD has amended its existing second lien notes, due to mature this coming Oct. 15, to increase their borrowing base advance rate for inventory and defer their collateral coverage test and restart it with the second quarter of 2018. The beleaguered retailer said it's in discussions with certain lenders regarding additional transactions to improve the terms on potentially more than $1 billion of its non-first lien debt.

SHLD is also continuing to pursue a secured credit facility, consisting of an approximately $407-million first lien tranche and a second lien tranche of up to $200 million, secured by the 138 properties currently subject to a ring-fence arrangement with the Pension Benefit Guaranty Corp. The 138 properties have an aggregate appraised value of approximately $985 million, SHLD says.

“We made significant progress in 2017 through our efforts to reset our cost base and enhance our liquidity, as well as our recently announced agreement with the PBGC to pre-fund our contributions to our pension plan for the next two years,” says Eddie Lampert, chairman and CEO of SHLD. The latest financial initiatives, he adds, “build on those achievements and make clear our determination to remain a viable competitor in the challenging retail environment.”

The company also outlined incremental actions to further streamline its operations to drive profitability. These include cost reductions of $200 million on an annualized basis in 2018 unrelated to store closures.

Instant Insights /

Sears Pursues Steps to Enhance Its Liquidity

Related Stories

Recommended For You