Edward Lampert, Sears' (NASDAQ:SHLD) chief executive, is loaning Sears Holdings $400 million from his hedge fund.
The secured short-term loan will be funded using Lampert's real estate as collateral, reported the Chicago Tribune. Half of the loan was filed on Monday with the Securities and Exchange Commission and the other half will be filed at the end of the month.
The regulatory filing stated that the loan is from entities affiliated with Lampert's ESL Investments, reported the Associated Press. The loan will be due at the end of this year, though the maturity date can be extended to Feb. 28 as long as there is no default.
Lampert is Sears' biggest stockholder. He led the charge to combine Sears and Kmart in 2005 after bringing Kmart out of bankruptcy. However, the company has still seen several financial setbacks and recently reported its 30th consecutive quarterly loss.
The loan is to be used for general purposes and comes less than a week after the company's credit status was approaching a default. Fitch Ratings cited mounting losses, continued revenue declines and worrisome cash burn as reasons for the downgrade—meaning Sears might not make it beyond 2016.
As part of a turnaround effort, Sears announced in spring that it would close 80 stores this fiscal year. The retailer has closed approximately 500 stores since 2005.
-See this Chicago Tribune article
-See this Associated Press article
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