Exclusive: Sears snags new financial lifeline as losses
continue - sources
Send a link to a friend
[February 21, 2020] By
Jessica DiNapoli and Mike Spector
(Reuters) - U.S. department store operator
Sears has reached a deal for a fresh financial lifeline totaling roughly
$100 million from hedge fund Brigade Capital Management LP, as it tries
to stabilize after bankruptcy, people familiar with the matter said on
Thursday.
Sears' billionaire owner Eddie Lampert rescued the retailer from
liquidation in a $5.2 billion takeover during bankruptcy proceedings a
year ago. The company's unabated need for new funding underscores
Lampert's challenges in turning it around.
Sears reached an agreement with Brigade for the $100 million financing
in recent weeks, according to the sources, who spoke on the condition
they not be identified because the negotiations were confidential.
Lampert has also bankrolled Sears in recent months, the sources added,
without disclosing the total amount of funding he provided.
A spokesman for Sears, now called Transform Holdco LLC, declined to
comment. Brigade did not respond to a request for comment.
Brigade has extended loans to other troubled retailers, including
high-fashion chain Barneys New York Inc and childrens' clothing shop
Gymboree.
Last year, Sears sold its DieHard car battery business to Advance Auto
Parts Inc <AAP.N> for $200 million and clinched a separate $250 million
loan from Lampert's hedge fund, ESL Investments Inc, and other
investors. The company has also been paying down some of its borrowings
from banks, one of the sources said.
[to top of second column] |
The Sears store is pictured during Black Friday sales in Cutler Bay,
Florida, U.S. November 29, 2019. REUTERS/Maria Alejandra Cardona
Sears said in November it would close nearly 100 stores, leaving it with only
about 182, down sharply from the 425 Lampert acquired when he rescued the chain
from bankruptcy. The department store operator is a shadow of the company
created by Lampert more than 15 years ago through its merger with Kmart, when it
boasted $55 billion in annual sales.
Sears lost money nearly every year over the past decade, amid competition from
e-commerce firms such as Amazon.com Inc <AMZN.O>, while Lampert, formerly the
company's chairman and chief executive, provided financing lines to keep it
afloat.
The company's struggles have drained its cash coffers, risking a potential
breach of its debt agreements with banks, people familiar with the matter have
said. That has left Sears with the choice of raising additional capital or
closing even more stores.
(Reporting by Jessica DiNapoli and Mike Spector in New York; Editing by Tom
Brown)
[© 2020 Thomson Reuters. All rights
reserved.] Copyright 2020 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|