Sears Gets $500 Million Loan as Lampert, Gates's Cascade Jump In

  • Struggling retailer already has drawn down half of balance
  • Department store chain plans more asset sales, cost cutting

Pedestrians walk past a Sears store.

Photographer: Susana Gonzalez/Bloomberg

Sears Holdings Corp., the department-store operator run by hedge fund manager Edward Lampert, obtained a new short-term loan partially funded by an investment firm that manages billionaire Bill Gates’s fortune.

Cascade Investment has funded $125 million of a $500 million loan that Sears raised by using about 20 of its mortgaged properties as collateral, the retailer said Friday in a statement. Another $125 million for the loan maturing in July 2017 was provided by ESL Investments, which is controlled by Lampert.

Sears said it already drew the $250 million that was financed by Cascade and ESL. The two investment firms will provide some or all of the next $250 million available on the loan facility that isn’t syndicated to other loan investors, according to the statement.

Lampert, the chairman and chief executive officer of Sears, has been shrinking the once-mighty retailer as its cash dwindles. He’s sold and spun off assets, including some of its best real estate, and invested heavily in its online and rewards programs. One of the last analysts covering the company’s stock said in February that the chain is no longer “viable as a retailer in its current form.”

Sales at stores open at least a year, considered a key gauge of retail performance, have declined and pushed the company to report a $580 million fourth-quarter net loss. As its cash dwindles, the Hoffman Estates, Illinois-based company has said it plans to sell at least $300 million in assets in the first half of its fiscal year and eliminate as much as $650 million in expenses in 2016.

The $500 million loan is the second one that Sears has raised this year. Last month it completed a $750 million first-lien loan due July 2020, according to data compiled by Bloomberg.

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