Sears Holdings (SHLD) has certainly seen better days, and now the lagging company needs to be propped up with a short-term loan from CEO Eddie Lampert’s ESL Investments. Bruce Berkowitz of Fairholme might join in the rescue of Sears, and has informed U.S. Securities Exchange Commission that he may invest up to $100 million in the short term loan through affiliate St. Joe Company.
In a move that has been criticized by Wall Street, CEO Eddie Lampert has given Sears a $400 million short-term loan, of which $200 million has already been given and the other $200 million will be handed to Sears on September 30. The loan is intended to be used for corporate purposes, and has an interest rate of 5%. The deadline for repayment is December 31, but it can be extended through February if Sears doesn’t default on the loan.
Sears is in trouble, reporting a $573 million loss in 2014 or $5.39 per share compared to a loss of $194 million or $1.83 in 2013. Lampert was frank in his remarks on the conference call, “Our earnings are unacceptable, ” however, he mentioned cutting costs and adding promotions as ways to help patch up the situation. Who knows whether that will be merely a bandaid or if a real recovery is in store for Sears.