Sears Holdings Corporation has obtained a secured standby letter of credit facility (LC Facility) that provides the struggling retailer with additional liquidity to fund its operations, the company announced.
In a press release, company officials said the LC Facility will allow Sears Holdings to request standby letters of credit in an initial amount of up to $200 million and may be expanded at the request of the company and with the consent of the lenders under the facility by up 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.
“As Sears Holdings has consistently shown, we will take actions to adjust our capital structure, generate liquidity and manage our business to enable us to execute on our transformation while meeting all of our financial obligations,” said Jason Hollar, Sears Holdings’ chief financial officer. “This new standby letter of credit facility further demonstrates that Sears Holdings has numerous options to finance our business strategy.”
News of the LC Facility closes a difficult year for Sears Holdings. The company has shut a number of stores and has seen revenue continue to fall. In early December, Sears reported that company-wide comparable sales for the third quarter decreased 7.4%, with Kmart comps down 4.4% and Sears full-line store comps down 10%. Revenues in the quarter tumbled to $5 billion from $5.8 billion in the year-prior third quarter, with the effect of fewer Kmart and Sears full-line stores in operation and comp declines factoring in the decline.
The terms of the LC Facility were approved by the related party transactions subcommittee of the board of directors of the company, with advice from Centerview Partners and Weil Gotshal & Manges, the subcommittee’s outside financial and legal advisors.
