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Sears secures $100m in new financing

RBR Staff Writer Published 11 January 2018

Sears has raised $100m in new financing and is pursuing a further $200m from other counterparties.

The company also stated that if its efforts to raise money fail, it will have to resort to all other options to maximize the value of its assets.

Sears CFO Rob Riecker stated that the company is pursuing transactions to adjust its capital structure to generate liquidity and to increase its financial flexibility.

The new capital can be regarded as a progress towards its liquidity objective and shows that the company has options to finance for its business.

Comparable store sales at Sears and Kmart for the initial two months of the fourth quarter of 2017 have decreased in the range of 16%-17%.  And, last week the company announced the closure of more than 100 of Kmart and Sears stores.

Sears stated that by closing non-performing stores, it was able to generate sales of about $850m in the last 12 months. While, closing of the stores could impact its sales, the main aim is to return the company to profitability.

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

Sears Holdings chairman and CEO Edward Lampert said: "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.

"The initiatives we have announced today build on those achievements and make clear our determination to remain a viable competitor in the challenging retail environment.”

Lampert stated that the financial transactions the company is pursuing and incremental cost actions are designed to accelerate its return to profitability and enable Sears Holdings to increase its investment in the most promising opportunities in its enterprise, including Shop Your Way network and Sears Home Services business.

Image: Sears storefront. Photo: Courtesy of Sears Brands, LLC.