Sears Holdings Corp. Chief Executive Officer Eddie Lampert is opening his wallet once again to help keep the struggling retailer in business, a move that could help placate vendors after an uncertain holiday season.
Lampert, a hedge fund manager and Sears’ biggest investor, will offer a $200 million letter of credit to the department-store chain through affiliates of his firm, ESL Investments Inc. The amount could be expanded to as much as $500 million with the consent of lenders, according to a statement released Thursday.
The move signals that Lampert remains committed to bankrolling Sears, even as the business suffers from dwindling sales and billions in red ink. After acquiring the once-mighty retailer more than a decade ago, he has sold off assets and real estate in a bid to return it to profitability. The 54-year-old became CEO of the company, which also includes Kmart, almost four years ago.
It’s a troubling sign that Lampert himself seems to be the only one willing to lend to Sears, said Noel Hebert, an analyst at Bloomberg Intelligence.
“The only person lending here is Eddie,” he said. This isn’t a “normal course” of action.
(The Kmart store in Halawa notified employees Tuesday that it will close in mid-March and begin liquidation sales Jan. 6.)
Earlier this month Sears reported another huge quarterly deficit — $748 million — bringing its total losses to $9.4 billion in the past eight years.
The company needs to raise roughly $1.5 billion to make it through 2017 comfortably, according to Christina Boni, an analyst at Moody’s Investors Service.