Sears Gets $100M Loan From CEO Eddie Lampert

Sears Holdings Corp. is getting another cash infusion from CEO Edward Lampert, just in time for the key holiday season. Lampert has agreed to loan Sears $100 million through his ESL Investments fund — if the retailer agrees to pledge more stores or other assets as collateral. The agreement, disclosed in a recent filing with the SEC, is part of a $500 million credit backed by 61 Sears properties that ESL gave the retailer in January. Sears tapped the full amount, but paid back about $100.5 million of the initial loan this summer, after selling more Sears and Kmart stores.That payment freed up the cash for this latest infusion. The remaining $400 million of the original loan, which carries an 8 percent interest rate, is scheduled to come due in July 2020, according to the filing. The new $100 million loan has an 11 percent rate and is due in April 2018. If Sears taps this most recent amount, it would bring the total loan from Lampert and ESL to $2.2 billion since September 2014.

Total Retail’s Take: With this most recent cash infusion, Lampert is providing a bit of breathing room as Sears enters the holiday season, which hasn't been kind to the retailer in recent years. In 2016, Sears Holdings reported a net fourth quarter loss of $607 million, compared to a $580 million loss for the same period in 2015. Same-store sales in November and December last year plunged between 12 percent and 13 percent. Overall, sales have slipped steadily since 2005 for Sears Holdings. At this point, one has to question why Lampert keeps pumping money into the business. A turnaround is becoming more and more unlikely.