By Zoe Galland, Bloomberg News
CHICAGO (Sept. 16, 2014) — Sears Holdings Corp. is taking a $400 million short-term loan from the hedge fund owned by its CEO and largest shareholder, Edward Lampert.
Mr. Lampert's ESL Investments provided $200 million as of Sept. 14 and will fund the remainder Sept. 30, Hoffman Estates, Ill.-based Sears said in a regulatory filing. The money will be used for “general corporate purposes.”
Sears has been selling and spinning off assets to raise cash as losses mount. The company posted a second-quarter loss of $573 million last month and said it would seek more long-term capital-structure flexibility from lenders.
“It's an easy deal for him to do” because it is short- term and secured, said Mary Ross Gilbert, an analyst at Imperial Capital L.L.C. “It's no surprise because we already know that the company has significant cash burn.”
The loan helps meet the company's previously announced goal of raising $1 billion in liquidity this year, Howard Riefs, a Sears spokesman, said in an email.