Sears Holdings Corp (NASDAQ:SHLD) Reports Incremental Liquidity Initiatives To Improve Financial Flexibility

Sears Holdings Corp (NASDAQ:SHLD) has entered into a deal to extend the maturity of its current term loan. The term loan, which initially was expected to mature in June 2018, will now mature in January 2019, with the alternative to further extend the maturity date to July 2019.

The details

During the fourth quarter, Sears Holdings paid $325 million, lowering the due balance to around $400 million and bringing its total Term Loan repayment to around $570 million for this year. In addition, the firm reported that it plans to get a new secured credit facility in connection with the deal finalized with the Pension Benefit Guaranty Corporation on November 7, 2017, that offers for the launch of 138 of their properties from a ring-fence deal with the PGBC.

The Secured Credit Facility is projected to be secured by such assets and comprise of an around $407 million, net of related costs, first lien and second lien tranche of up to $200 million. Sears Holdings plans to utilize the net proceeds from the Facility to fund the compensation of around $407 million into the company’s pension plans and also for general corporate purposes.

After the funding of this pension contribution, the company will be relieved of the due to make additional contributions to the pension plans for around two years, other than a supplemental payment of $20 million due in Q2 2018. The company projects to close the facility over time with the sales proceeds of the underlying assets.

Rob Riecker, the Chief Financial Officer of Sears, reported that as indicated in their third quarter earnings update, they have taken further initiative to offer the firm with additional financial flexibility as they enter 2018. The Term Loan extension enhances their short-term debt maturity standing, while the credit facility related with the PBGC deal will support their continued commitment to the firm’s pension plans while improving their financial flexibility.

 

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Standley Adam

Standley Adam

Adam is a staff reporter for US Markets Daily Publications & Media, covering foreign affairs and domestic policy.