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Sears refinances debt—and gets a reprieve to repay lenders

Sears Holdings Corp. has just gotten another lifeline to keep the company above water.

The struggling department store retailer is refinancing a loan for $186 million -- funds it borrowed from JPP, LLC and JPP II, LLC, affiliates of ESL Investments, the hedge fund controlled by Sears chairman and CEO Eddie Lampert, and Bill Gates’ Cascade Investment, according to a regulatory document filed by Sears on June 4. (Sears used the money to pay off a 2017 loan secured by mortgages on 13 real estate properties, according to Trib Live.)

Through the refinancing, Sears will buy itself some time. The struggling retailer extended the maturity of two existing loans worth about $320 million (and set to mature in July), and consolidated these with a third existing loan to create a single facility, according to Chris Brathwaite, spokesman for Sears.

This consolidated loan is secured by 69 Sears-owned real estate properties, according to the Chicago Tribune.

Through the deal, the retailer now has $779 million due in July, 2020. Separately, Sears already owes Cascade and ESL’s affiliates approximatley $593 million under an existing loan agreement, according to the regulatory filing.

The transaction comes on the heels of a $425 million payment from an operational agreement with Citi, making this is another vote of confidence in Sears by a third party, Brathwaite added.

The efforts comes on the heels of Sears’ other turnaround initiatives, including job cuts and store closures. Last week, Sears identified another 100 non-profitable locations, many of which will begin store closing sales “in the near future.” (Sears operated a total of 894 stores at the end of the first quarter, which is 381 less than it did one year ago.). It posted a list of 15 Kmart stores and 48 Sears stores that will close in early September, with liquidation sales set to begin as early as June 14.

The company has also been selling off assets, such as store real estate and the Craftsman tool brand. In April, ESL Investments also proposed to buy certain assets of the chain, including its signature alliance brand Kenmore. The offer was presented after Sears was unable to find a buyer for the assets.
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