Special: Sears snags new financial lifeline as losses continue

Special: Sears snags new financial lifeline as losses continue

SUBMIT IMAGE: The Sears shop is pictured throughout Black Friday sales in Cutler Bay, Florida, U.S. November 29,2019 REUTERS/Maria Alejandra Cardona

( Reuters) – U.S. outlet store operator Sears has actually reached an offer for a fresh financial lifeline totaling roughly $100 million from hedge fund Brigade Capital Management LP, as it tries to support after bankruptcy, individuals familiar with the matter stated on Thursday.

Sears’ billionaire owner Eddie Lampert rescued the seller from liquidation in a $5.2 billion takeover during bankruptcy procedures a year back. The business’s unabated need for new funding highlights Lampert’s challenges in turning it around.

Sears reached an arrangement with Brigade for the $100 million funding in recent weeks, according to the sources, who spoke on the condition they not be determined since the settlements were confidential. Lampert has also bankrolled Sears in current months, the sources added, without divulging the total amount of financing he offered.

A representative for Sears, now called Transform Holdco LLC, decreased to comment. Brigade did not respond to a request for remark.

Brigade has extended loans to other distressed merchants, consisting of high-fashion chain Barneys New York Inc and childrens’ clothes store Gymboree.

In 2015, Sears sold its DieHard automobile battery organisation to Advance Car Components Inc ( AAP.N) for $200 million and clinched a separate $250 million loan from Lampert’s hedge fund, ESL Investments Inc, and other financiers. The business has actually likewise been paying for a few of its borrowings from banks, among the sources stated.

Sears stated in November it would close nearly 100 stores, leaving it with only about 182, down greatly from the 425 Lampert got when he rescued the chain from personal bankruptcy. The outlet store operator is a shadow of the company produced by Lampert more than 15 years ago through its merger with Kmart, when it boasted $55 billion in annual sales.

Sears lost money almost every year over the past years, amid competition from e-commerce companies such as Amazon.com Inc ( AMZN.O), while Lampert, previously the company’s chairman and chief executive, supplied financing lines to keep it afloat.

The company’s battles have drained its cash coffers, running the risk of a potential breach of its financial obligation arrangements with banks, people familiar with the matter have said. That has left Sears with the choice of raising extra capital or closing much more stores.

Reporting by Jessica DiNapoli and Mike Spector in New York City; Modifying by Tom Brown

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