Shop Your Way Program will benefit from influx of cash.
Sears Holding Corp. is leveraging its real estate assets once again to secure a 15 month $500 million loan. The first $250 million is secured by mortgages on 13 properties owned by its subsidiaries and will be secured by an additional eight properties if any more of the loan is drawn. Sears said that the loan will help it continue to work on its turnaround, most notably its omnichannel Shop Your Way program.
Sears has struggled recently, with the closure of some 50 stores and Q4 revenue declines of $796 million, even as the retailer searches for flexibility in its turnaround through cost-cutting and other efficiency initiatives. The Shop Your Way program has gotten some positive response from retail experts and customers, but it is unclear how much this is helping Sears’ overall turnaround.
The secured loan facility is also propped up with investment funds from ESL Investments (Sears CEO Edward Lampert’s own hedge fund) and Microsoft founder Bill Gates’s Cascade fund, according to Bloomberg and Crain’s Chicago Business. ESL Investments additionally took on some of the debt Sears had secured earlier.
According to Sears EVP and CFO Robert A. Schriesheim, the company knows what it’s doing, and that its considerable real estate assets will continue to help foster its turnaround.
"We have an asset rich portfolio which provides us with numerous options to finance our transformation strategy," said Robert A. Schriesheim, Executive Vice President and Chief Financial Officer for Sears Holdings. "The expected closing today of the previously announced $750 million Term Loan, together with this $500 million facility, provides $1.25 billion of committed financing. When considered together with our previously announced intention to monetize at least $300 million of assets, this set of actions would result in an aggregate of $1.5 billion of enhanced liquidity. “
"As we have consistently demonstrated, we will continue to take actions to adjust our capital structure and manage our business to enable us to execute on our transformation while meeting all of our financial obligations," Schriesheim said.
