Sears gets another lifeline from CEO — this time backed with real estate

For the second time in a week, Sears Holdings Corp. is borrowing money from the hedge fund of its CEO.



The embattled retailer has entered into a $500 million secured loan facility (maturing in July 2020) with ESL Investments, the hedge fund controlled by Sears chairman and CEO Edward Lampert. Of the total, $321 million was funded immediately, and an additional $179 million may be drawn in the future.



The loan is secured by mortgages on 46 properties owned by Sears’ subsidies and will be secured by additional properties if the remaining $179 million loan commitment is drawn. By backing the loan with Sears' real estate, Lampert and ESL could be among the first to collect if the company fails, according to bankruptcy experts, reported Business Insider.



Sears said the new funding will provide the company with “additional liquidity to fund its operations while it initiates a process to market and sell a portfolio of its real estate assets, the proceeds of which would primarily be used to repay outstanding indebtedness.”



"This loan facility will provide Sears Holdings with additional financial flexibility and support our operations as we meet all of our financial obligations," said Jason M. Hollar, CFO, Sears Holdings.



Last week, Sears announced that it had obtained a loan called a secured letter of credit from ESL, for $200 million, with the option to expand the amount to $500 million.