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Originally Posted by legion
1) I think the current CEO of Sears has sunk hundreds of millions of his own money to keep them afloat. Unless Sears comes up with a radically different strategy than every other department store, they are done for. They currently have a strategy that is half a century out of date, and poorly-executed at that.
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In summary - Lampart has been funding expenses by loaning Sears (at high interest rates) using Sears real estate as collatoral.
How Sears CEO Lampert cashes in as stores cash out
Here's how Lampert has retained assets even as Sears has shriveled:
•Lands' End: Sears spun off retailer Lands’ End in 2014, but Lampert's hedge fund owns 59% of the company. That stake was worth nearly $360 million as of Wednesday morning.
•Real estate: Sears sold 235 store properties and its interest in another 31 properties to a newly formed real estate investment trust (REIT) called Seritage Growth Properties for $2.7 billion in 2015. The deal gave Seritage control of some of Sears’ best properties in a sale-leaseback transaction. Lampert’s ESL owns 43.5% of the limited partnership units of Seritage and 7.9% of the REIT’s voting power.
•Real estate collateral: Entities affiliated with Lampert's hedge fund extended $500 million in credit to Sears in January, secured by at least 46 Sears properties and possibly more. That means that in the event of bankruptcy, the lender may be awarded the property rights, giving Lampert control of those store sites.
•Additional secured financing: ESL lenders provided Sears up to $500 million through a secured letter of credit facility in December, from which Sears has already drawn $200 million. ESL lenders also hold $336 million in secured debt issued to Sears in April through a separate facility and term loan, as well as $300 million in a second lien term loan issued in September. Secured lenders are paid first in bankruptcy.
•Sears Canada: Sears partially spun off its Canadian division in 2012, but Lampert's ESL owns about 45% of the company. That stake was worth nearly $80 million as of Wednesday morning.
•Sears Hometown and Outlet Stores: Sears spun off the franchise in 2012, but ESL retains 57% ownership of the company. That stake was worth about $45 million as of Wednesday morning.