Sears Shares Bounce, Beleaguered Retailer Gets A Lifeline With New Credit Facility

Thrown A Lifeline?

Sears said that it has obtained a secured standby letter of credit facility, which will provide an initial amount of up to $200 million and could be expanded by up to an additional $300 million.

Sears' stock has lost more than 60 percent since the start of 2016 but hit a multi-year low of $8.00 on Wednesday. The company has shown a pattern of reporting poor quarterly earnings reports, the most recent of which consisted of a better-than-expected loss along with negative same-store sales and several signs it is falling behind its department store peers.

However, investors turned incrementally bullish on the company Thursday morning, as the announcement may imply it was given a lifeline to continue operating. Sears has similarly communicated other initiatives to boost its capital, including monetizing its real estate holdings. Image Credit: By Mike Kalasnik from Fort Mill, USA [CC BY-SA 2.0], via Wikimedia Commons

"As Sears Holdings has consistently shown, we will take actions to adjust our capital structure, generate liquidity and manage our business to enable us to execute on our transformation while meeting all of our financial obligations. This new standby letter of credit facility further demonstrates that Sears Holdings has numerous options to finance our business strategy," said Jason M. Hollar, Sears Holdings' chief financial officer.