In yet another effort to drum up cash, Sears Holdings said it would raise as much as $625 million through a rights offering of unsecured notes with warrants to quell concerns about its finances in advance of the holiday season.
And Sears has again turned to its CEO Edward Lampert for the money. The company leader’s hedgefund, ESL Investments, said it intends to purchase roughly half ($303 million) of the rights offering.
“This rights offering provides Sears Holdings with additional long-term flexibility and we expect it will provide confidence to our vendors and other constituents that we will continue to generate the liquidity needed to support our business,” the company noted on its blog Monday.
The latest fundraising is the distressed retailer’s third in just more than a month—it secured a $400 million short-term loan from ESL in September, and it announced earlier this month that it would sell off most of its stake in Sears Canada, which is expected to generate $380 million.
If both rights offerings are fully subscribed, Sears said it will generate up to $2.07 billion in liquidity in fiscal 2014.
“We intend to continue to evaluate and evolve Sears Holdings’ capital structure with a goal of achieving more long-term financial flexibility utilizing our rich portfolio of assets,” the company noted. “The actions we have taken over the past month, including our announcements today, are tangible steps toward this end. We expect to take additional steps to demonstrate our financial strength and flexibility over time.”
Sears also announced Monday that it would lease retail space in seven of its stores to European fashion retailer Primark. The company will retain up to 100,000 square feet of selling space with a streamlined store format at six of the locations.
According to the company, “Sears will retain a considerable amount of space to serve our members. At the same time, Sears will generate substantial income from leasing space, which we believe will turn unprofitable or unproductive space into profitable space.”
Sears has already leased store space to Dick’s Sporting Goods, Forever 21 and Whole Foods.
The retailer said it is continuing to “right-size, redeploy and highlight” the value of its assets, and will work to transition from an asset-intensive retailer to a more asset-light, integrated membership-focused company.
“We remain highly focused on restoring our company to profitability and believe we have a framework and path to do so. As we move forward with our transformation, we do so with a tremendous asset base allowing us great financial flexibility. We possess a proven track record of being able to fund our transformation, having generated over $5 billion of liquidity for Sears Holdings since 2012,” the company noted on its blog.