Sears CEO Edward Lampert is still committed to bankrolling the retailer.
Sears Holding Corp CEO Eddie Lampert will open his wallet again to help keep the struggling retailer afloat, a move that could help to placate vendors following an uncertain holiday shopping season.
The CEO, a manager of hedge funds and the largest investor of Sears, will give the chain of department stores a letter of credit worth $200 million through his affiliates to his company, ESL Investments.
This amount can be increased to up to $500 million with lenders consent according to a prepared statement released late Thursday.
This move signals that the Sears CEO is still committed to the bankrolling of Sears, even though the business continues to suffer from declining sales and billions in losses.
After Lampert acquired the retailer, which at one time was one of the leaders in the U.S., over a decade ago, he sold assets off as well as real estate in an attempt to return the retailer to profitability.
Lampert, who is 54, became the CEO of the business, which includes Kmart as well, nearly four years ago.
An analyst on Wall Street said Lampert opening his wallet again was troubling in that the CEO himself appears to be the only one who is willing to lend anything to Sears.
Sears stock was up 10% after the news closing at $9.00, but for 2016 is down nearly 58%.
Lampert’s hedge fund company is also helping to support the real estate investment trust Seritage Growth Properties that was spun off Sears last year. ESL is going to provide an unsecured $200 million line of credit, said Seritage earlier this week.
In early December, Sears posted another large quarterly loss of $748 million that brought the total losses for the last eight years to more than $9.4 billion.
Sears needs to find $1.5 billion in order to get through 2017 said an analyst with Moody’s.
The announcement on Thursday of the letter of credit comes up short of giving actual cash, but rather provides vendors a backstop.
Lampert and the hedge fund he operates owned close to half of the shares of Sears earlier in December. He owns over $1 billion of the debt that Sears has as well.
This new letter of credit raises concerns as well about the holiday shopping season that is for retailers the most lucrative period of the year.