For the second time in less than a week, Sears Holdings has entered into a secured loan facility with the funding deriving from an investment company owned by its CEO.
In a company press release, Sears officials said the $500 million loan facility gives the company immediate access to $321 million with an additional $179 million available for future use. The loan is secured by mortgages on 46 real properties owned by the company’s subsidiaries and will be secured by additional real properties if the remaining $179 million loan commitment is drawn.
“This loan facility will provide Sears Holdings with additional financial flexibility and support our operations as we meet all of our financial obligations,” said Jason Hollar, Sears Holdings’ chief financial officer.
Entities affiliated with ESL Investments, Inc. are the lenders under the loan facility. Edward S. Lampert, Sears Holdings chief executive officer and chairman, controls ESL Investments, Inc.
On December 29, Sears Holdings said it received standby letters of credit in an initial amount of up to $200 million that could be expanded at the request of the company and with the consent of the lenders under the facility to an additional $300 million. The LC Facility is being provided by JPP, LLC and JPP II, LLC, which are affiliates of ESL Investments, Inc., with Citibank, N.A. serving as administrative agent and issuing bank.
In addition, Seritage Growth Properties said in an SEC filing that Sears is exercising its right to terminate the leases at 19 unprofitable locations that total 1.9 million square feet. According to the filing, the annual base rent at these stores is approximately $5.9 million, or 2.7% of the company’s total annual base rent as of September 30, 2016, including all signed leases. Specifics on the locations of the 19 stores were not immediately available.
Seritage is a real estate investment trust that was spun off from Sears by Lampert, who serves as Seritage’s chairman of the board.
