Report: Sears needs $4 billion to avoid 2016 collapse

Hoffman Estates, Ill. – A $400 million loan Eddie Lampert, the CEO and largest shareholder of Sears Holdings Corp., is making to Sears this month reportedly is only enough to last the struggling retailer for three months. According to Bloomberg, global ratings agency Fitch Ratings is projecting that Sears will need $4 billion in capital to avoid running out of cash altogether in 2016.



Sears had negative free cash flow of $1.5 billion in 2013 and had enough cash on hand to last about seven more months prior to Lampert’s loan. According to a Bloomberg research note, Sears may need to sell additional debt, continue asset divestitures or both if it wants to reduce costs while also building its brands.



Sears received the first $200 million of the loan from Lampert's ESL Investments on Sept. 15, and expects to receive the remaining amount on Sept. 30. The company said it would use the money for “general corporate purposes. Sears recorded a loss of nearly $1 billion in the six months through Aug. 2.



Revenue fell more than 8%.