Sears Holdings noted improvement in operating performance for Q4/16, and outlined important actions to drive profitability.
Sears Holdings initiated a restructuring program targeted to deliver at least $1 billion in annualized cost savings in 2017. These savings include cost reductions from the previously announced closure of 108 Kmart and 42 Sears stores.
On February 10, 2017, the company entered into an agreement to amend its existing asset-based credit facility. The amendment provides a $140 million increase to available borrowing capacity under the revolver as compared to availability reported at the end of the third quarter of 2016. Sears Holdings concluded the fourth quarter of 2016 with no borrowings and $464 million of letters of credit outstanding, against its asset-based credit facility.
The amendment will reduce the aggregate revolver commitments from $1.971 billion to $1.5 billion, but will implement other modifications to covenants and reserves against the credit facility borrowing base that improve net liquidity. The amendment also provides additional flexibility in the form of a $250 million increase in the general debt basket from $750 million to $1 billion.
Since the calendar year started, Sears has taken the following strategic actions regarding its financial position:
- Obtained an additional $179 million of loan proceeds, which fully utilizes the $500 million senior secured loan facility entered into on January 4, 2017;
- Closed a $72.5 million real estate sale on January 26, 2017 for five Sears Full-line stores and two Sears Auto Centers;
- Initiated the closing process of the 150 stores announced during our fourth quarter 2016 with the expectation to complete the closures of all 150 stores during the first quarter of 2017;
- Engaged Eastdil Secured to market and sell at least $1 billion of certain real estate properties under the direction of a committee of the board of directors; and
- Announced the Craftsman transaction for $775 million in cash plus participation in the externalization of the Craftsman brand by Stanley Black & Decker.