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Sears Extends Debt Maturity, Plans to Sell More Real Estate

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Sears Holdings ends the year as it began it, by kicking the can down the road in an attempt to remain liquid.

The retail group announced yesterday that it would be extending the maturity of its existing term loan from June 2018 to January 2019 with an option to extended it out to July 2019. Sears reportedly repaid $570 million of its term loan in 2017.

Additionally, Sears plans to obtain a new secured credit facility using 138 formerly ring-fenced properties, which were released through an agreement with the Pension Benefit Guaranty Corporation, as collateral in the amount of $607 million. The company intends to use $407 million to fund its pension plans and for “general corporate purposes.” With that payment into the plans, Sears will have fulfilled its obligation for plan contributions for two years. The retailer plans to repay the credit facility through the sale of the properties.

“The extension of the Term Loan improves our short-term debt maturity profile, while the credit facility associated with the PBGC agreement will support our continued commitment to the Company’s pension plans while enhancing our financial flexibility,” said Rob Riecker, Sears Holdings’ chief financial officer.

Riecker also added “In addition to the liquidity actions announced today, we remain focused on improving our performance by diversifying the Company’s revenue streams….”

The company is exploring third-party partnerships and it continues to lean heavily on its Shop Your Way rewards platform. It has also been on a cost cutting tear to the tune of $1.25 billion this year. The retailer had closed 326 doors through the end of the third quarter, which Sears has blamed for its sales declines each quarter.

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