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Sears Nabs Another Loan With Help from Bill Gates

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Sears

In a move akin to putting lipstick on a pig, Sears Holdings has obtained a new short-term loan.

The company on Friday announced it had entered into a 15-month, $500 million secured loan facility, funded by Cascade Investments, a hedge fund controlled by Bill Gates, and CEO Eddie Lampert’s ESL Investments.

That loan is in addition to a previously announced one for $750 million, as well as a further $300 million from the expected sale of Sears or Kmart stores or other assets. The company said the combined $1.5 billion will help provide the financial flexibility it needs in order to transform into “a more asset-light, integrated retailer.”

According to a press release, half of the new loan was funded on Friday and the remainder can be drawn at a later date. ESL and Cascade each provided $125 million of the initial $250 million, secured by mortgages on 13 Sears Holdings properties, and a further eight will be used as collateral if any additional amounts are drawn.

“We have an asset-rich portfolio which provides us with numerous options to finance our transformation strategy,” Robert Schriesheim, executive vice president and chief financial officer for the company, said. “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.”

The news followed yet another year of poor performances. Sales at Sears and Kmart stores open for at least a year declined by 6.9% and 7.2% respectively in the three months ended Jan. 30, resulting in an overall drop in comps of 7.1%, and a $796 million decrease in revenue to $7.3 billion. For the full fiscal 2015, income declined by roughly $6.1 billion to $25.1 billion, as compared to $31.2 billion in the prior year.

A proxy statement filed with the Securities and Exchange Commission earlier this month revealed that Lampert (who is also the majority shareholder and chairman) will remain in the role of CEO through 2018.

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