Sears Holdings Corp (NASDAQ:SHLD) has received $200 million in credit from CEO Eddie Lampert’s hedge fund ESL Investment.
A filing with the Securities and Exchange Commission on Monday revealed that Sears struck a deal in which it would receive $200 million in credit from Lampert’s hedge fund. ESL Investments struck a short-term credit deal with Sears in which it would provide the $200 million to the company. The loan is expected to reach maturity after 151 days and it has a fixed interest rate of 9.75 percent according to a report from the firm.
“This facility is intended to provide the company with the flexibility to generate additional liquidity on an as-needed basis. This adjustment to our capital structure demonstrates that Sears Holdings will continue to take actions to generate liquidity and manage our business while meeting all of our financial obligations,” stated Rob Riecker, the CFO of Sears.
Lampert’s hedge fund has played a significant part in keeping the business afloat
Lampert and his hedge fund have been pivotal towards keeping Sears afloat. The new credit line is not the first time that ESL Investment has offered financial support to the company. In fact, the hedge fund has loaned the company more than $1.6 billion over the past two years to keep the business running.
Sears has been going through some rough times and this has even been reflected in the performance on the stock market. The stock tanked massively last year, losing about 40 percent of its value. However, Monday’s announcement about the $200 million credit line from Lampert’s hedge fund seems to have caused a positive reaction from investors because the stock went up by 7 percent.
Meanwhile, Sears has been trying out other measures of staying afloat. Some of these measures include selling real estate and closing hundreds of stores throughout the U.S. Lampert stated that the company had adopted the strategy as a reaction to the stores that were not generating profit. He also pointed out that closing the stores was a good move because most of them were too big for the firm’s needs.
Sears stock closed the latest trading session on Monday at $9.04.
