Sears holding Corp. is seeking to borrow $400 million from CEO, Edward Lampert’s hedge fund, which will give the retailer an infusion for holidays after burning through its cash during summer.
Entities affiliated with ESL Investments Inc, owned by Lampert, are making the loan, which is being secured by 25 properties of the company, as announced by Sears on Monday during securities filing.
According to Market Watch, the loan is expected to mature December 31, though it could extend until February 28 if Sears does not violate any terms.
Sears has lost sales, market value and staff amid what is termed by critics as Lampert’s lack of investment. Sears has recorded losses of almost $1 billion the last six months, extending a stream of losses while the revenue dropped above 8%.
Sears said that it plans to raise $1 billion before the end of the year, a goal that it has met after the $400 million loan from ESL and the $665 million the retailer raised after selling real estate and spinning off the Lands’ End division to its shareholders.
Forbes reported that the cash infusion is one of the latest efforts from Lampert to assist the struggling retailer. In 2005, he combined Kmart with Sears, making his hedge fund the largest shareholder of the retailer. However, ESL had to cut the stake it had in Sears December last year to meet the demands from investors that wanted out of the hedge fund.
Despite Lampert’s efforts, Sears has been suffering losses and in August, it revealed that it had a net loss of $573 million in Q2, which was more than twice the net loss of $194 million it recorded in 2013’s Q2.
Lampert said that the loss of half a billion dollars was unacceptable and that the company was making an effort to reduce the costs of the business and improve it.
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To contact the reporter of this story; Yashu Gola at yashu@forexminute.com
