Sears Holdings Corp (SHLD.O) will raise $625 million through an unsecured loan and equity warrants—its third fundraising in a month—in an attempt to calm suppliers’ anxiety going into the holiday season, Reuters reported.
Sears shares rose 21.4 percent to $34.5 following the news.
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The plan is for Sears CEO Eddie Lampert and his hedge fund, ESL Investments Inc, to buy half the offering, where the right to buy unsecured senior notes and warrants will be extended to current shareholders.
It’s the third time Sears has asked Lampert for money this fall. In September ESL issued a $400 million loan, and in early October ESL bought $168 million out of a rights offering in Sears’ Canadian unit that was looking to raise $380 million.
The offering could bring Sears’ fundraising total in 2014 to $2.07 billion, which would be double the chain’s target as it was set in March, according to reuters.
Sears is also going to lease out seven stores to British discount fashion chain Primark, to raise more cash. The chain has decided to rent out any of its 2, 000 or so U.S. stores whose performance is not up to par.
CFO Rob Schriesheim wrote in a blog post the funds “will provide confidence to our vendors and other constituents.”
The reason this mega-borrowing is going on has to do with insurers scaling down or canceling their protection of Sears’ suppliers against nonpayment, according to Reuters. That could basically kill the chain this season.
“It helps for this year. They will still have to inject liquidity for the next year, ” Fitch Ratings analyst Monica Aggarwal told Reuters, suggesting the folks at Sears are burning through the cash. “There is a need for cash inflow to keep the operations going, ” she kind of stated the obvious.
