Sears secures $250 million lifeline, will close 96 stores
today Nov 8, 2019
Sears told Reuters on Thursday it had won a $250 million (£195.05 million) lifeline from lenders that include billionaire owner Eddie Lampert, and will close additional stores, as mounting losses strain the beleaguered U.S. department store chain's finances.
The new loan, put together in recent weeks, increases by roughly $100 million the $150 million of financing that Sears raised several weeks ago, said people familiar with the transaction, who were not authorized to discuss publicly some aspects of the deal.
Lampert, through his hedge fund ESL Investments Inc, has contributed a significant portion to the new financing, the people added.
The financing and additional store closures reflect the continued difficulties Lampert has had in his attempt to return Sears to its glory days, when it was among the largest retailers and owned the tallest building in the world.
Lampert combined Sears and rival chain Kmart more than 15 years ago, heralding the formation of a retailer with $55 billion in annual sales, but the company lost money almost every year over the past decade in the face of competition from the likes of e-commerce giant Amazon.com Inc.
Starting in December, Sears will close 96 stores, leaving the retailer with 182 locations, the company said in a statement. That is down from 425 stores Lampert acquired when he rescued Sears from bankruptcy proceedings in a $5.2 billion deal earlier this year.
Sears recently closed on a deal to buy affiliated company Sears Hometown and about 414 of its stores, which sell lawn furniture and appliances. Following the planned closures, the combined retailer will have roughly 600 locations. Sears also owns Kmart discount stores, 45 of which will shutter during the December closings, one of the people said.
Sears said its owners have been "working hard to position... for success by focusing on our competitive strengths and pruning operations that have struggled due to increased competition and other factors."
Lampert contributed less than half the total amount of the new Sears financing, the people said. Hedge-fund Cyrus Capital Partners LP is among the other lenders, Reuters has previously reported.
Sears is in the midst of an attempted turnaround after filing for bankruptcy protection in October 2018 after losing billions of dollars. Lampert, formerly the company's chairman and CEO, has bankrolled the retailer for years to keep it going but so far failed to return it to profitability.
In addition to fewer shoppers, Sears remains mired in litigation with its old bankruptcy estate over terms related to Lampert's earlier rescue.
Those challenges have drained the company's cash coffers, risking a potential violation of terms of its other bank debt, the people said. That left Sears faced with the choice of raising additional money or potentially closing even more stores, they said.
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