Sears is closing eight unprofitable Sears stores and 35 Kmart stores, according to a blog post written by Sears Chairman and CEO Eddie Lampert.
‘This is part of a strategy both to address losses from unprofitable stores and to reduce the square footage of other stores because many of them are simply too big for our current needs,” Lampert wrote. In conjunction with the closures of large stores, the company opened stores with smaller footprints in Fort Collins, CO and Pharr, TX in May.
“We also continue to pursue a range of steps to improve our liquidity and reduce our debt. In fact, today we announced an amendment to our existing second lien credit facility to provide up to an additional $500 million in borrowing capacity to Sears Holdings. We also closed on the sale of over $200 million in real estate, which resulted in a pay down of a portion of our real estate loan as well as to reduce the outstanding balance on our revolving credit facility. We expect additional real estate sales to pay down even more of our debt and to generate liquidity for the company,” Lampert wrote.
According to a related 8-K filing, Sears amended its credit agreement with JPP, providing an uncommitted line of credit facility in an aggregate principal amount not to exceed $500 million at any time. The company expects to use proceeds from line of credit loans for general corporate purposes.
The line of credit loans will be secured on a pari passu basis with the company’s existing obligations under the credit agreement, including the $300 million of term loans outstanding and its obligations under that certain indenture, dated October 12, 2010, by and among the company, the company subsidiaries and Wilmington Trust as successor collateral agent. The collateral includes inventory, receivables and other related assets of the company and its subsidiaries which are obligated on the line of credit loans, the term loan and the notes.