CEO’s Hedge Fund Bails Sears Out With A Cash Injection (Again)

Eddie Lampert — and his checkbook — really, really believe in Sears. In fact, according to a recent report from Chain Store Age, Lambert believes so much that, at this point, employees should consider calling him “Santa.”

That is because Sears’ Christmas has been saved by yet another infusion of cash — $100 million, to be exact — loaned from affiliates of Lampert’s hedge fund, ESL Investments. ESL has also agreed to lend as much as $100 million more to Sears by Dec. 1 if it becomes necessary.

The round two funding is contingent upon the retailer proving it has the necessary collateral to back it up, the filing said. Sears will not be receiving that money as a gift, though. The loan will come due next year and carries an 11 percent interest rate. By comparison, Sears’ original loans under a January agreement carry an 8 percent interest rate and are due in July 2020, according to the filing.

Chain Store Age reported the funding comes care of a $500 million credit facility backed by the mortgages on 61 of Sears’ properties. Sears was initially the borrower of the $500 million, but the firm repaid nearly $100 million by selling some of its real estate, the filing said.

Sears has not yet offered a comment.

But, the retailer continues to work doggedly toward a return to profitability — an effort that becomes particularly critical during the holiday season, when shoppers are ringing the registers with great enthusiasm.

“We have improved our liquidity and financial flexibility to invest in our transformation while meeting all of our financial obligations,” Sears said at the end of August in an update on its turnaround progress.

Somewhat good news, perhaps, but Sears’ same-store sales tumbled 11.5 percent as its revenue continued to slide. The department store chain also announced additional store closures to cut costs and seek additional liquidity, according to the Chain Store Age report.