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Sears raises $100m in funding, in talks with lenders for better debt terms

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Staff Writer | January 10, 2018
Sears
Retail   It is in discussions with certain lenders

Sears Holdings Corporation announced it has raised $100 million in new financing and is pursuing an additional $200 million from other counterparties.

In addition, Sears Holdings has amended its existing second lien notes, maturing October 15, 2018, to increase their borrowing base advance rate for inventory and defer their collateral coverage test and restart it with the second quarter of 2018.

It is in discussions with certain lenders regarding additional transactions to improve the terms on potentially more than $1 billion of its non-first lien debt.

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

Sears Holdings has amended the borrowing base definition in the indenture relating to the company's second lien notes, maturing October 15, 2018, to change the advance rate for inventory to 75%, increased from 65%.

The amendment also defers the collateral coverage test for purposes of the repurchase offer covenant in such indenture and restarts it with the second quarter of 2018 (such that no collateral coverage event can occur until the end of the third quarter of 2018). The company has also made corresponding amendments to its second lien credit agreement.

Sears Holdings has also initiated a series of financial transactions to raise an incremental $300 million in new liquidity.

The company has already received a $100 million term loan, supported by ground leases and select intellectual property.

Under certain circumstances and with the consent of the lender, the company will be entitled to raise an additional $200 million against the same collateral.


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