Sears Holdings' (NASDAQ:SHLD) chairman and CEO Eddie Lampert has acquired a portion of a $750 million loan that will help Sears pay down older debt. But the structure of the loan ensures that its backers will be paid off in the event of Sears' liquidation, according to Reuters.
Lampert bought the debt through his hedge fund, ESL Investments, and now has a couple hundred million dollars of a new term loan, according to the report. The loan is backed by Sears' inventory and receivables and pays an interest rate of more than four times that of the average loan made to other retailers.
The information comes from unnamed sources and Lampert declined to provide Reuters with a comment. Sears' official stance is that it has enough financial resources and liquid assets fund its transformation. The company is focused on growing through its Shop Your Way member program, but continues to close stores and report lower sales year over year.
Sears has also relied on selling its assets, including real estate and other businesses. Sears Auto Centers could be the next such asset spun off to fund this transformation.
-See this Reuters article
Sears' new exec to help manage transformation
Sears CEO: Retail is struggling
Sears to accelerate store closings
Sears to shutter some Kmart stores
Sears' sales plunge 20%