Sears secures court approval for additional $350 million loan

NEW YORK/SAN FRANCISCO (Reuters) - Sears Holdings Corp won court approval on Tuesday for $350 million in critical bankruptcy financing that will keep the 125-year-old retailer operating through the holidays while it attempts to reorganize.

Sears reached the deal with Cyrus Capital Partners LP for the financing just before a hearing began in U.S. Bankruptcy Court for the Southern District of New York on the retailer's so-called debtor-in-possession financing arrangements, according to a person familiar with the matter.

Cyrus' loan replaced a similar deal Sears reached earlier this month with Great American Capital Partners, a financial firm affiliated with liquidation specialist Great American Group and financial services firm B. Riley Financial Inc. Cyrus offered better terms to Sears, the person said.

RELATED: Every retailer who filed for bankruptcy in 2018

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Every retailer who filed for bankruptcy in 2018
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Every retailer who filed for bankruptcy in 2018

A'gaci

Women's apparel and accessories retailer A'Gaci filed for Chapter 11 bankruptcy in January. 

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Kiko USA

Cosmetics retailer Kiko USA Inc filed for Chapter 11 bankruptcy protection in January.

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Tops Markets

Tops Markets operates 174 supermarkets — called Tops Friendly Markets. The company filed for bankruptcy protection in February.

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The Bon-Ton Stores

The Bon-Ton Stores owns multiple department store chains including Bon-Ton, Bergner's, Boston Store, Carson's, Elder-Beerman, Herberger's, and Younkers. The company filed for bankruptcy in February.

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Remington Outdoor

Remington filed for Chapter 11 bankruptcy protection in March.

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The Walking Company

The shoe seller The Walking Company, which operates 208 stores in the US, filed for Chapter 11 bankruptcy protection in March.

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Claire's

The jewelry chain Claire's filed for bankruptcy in March.

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Southeastern Grocers

Southeastern Grocers, the parent company of the grocery chains Winn-Dixie, Harveys and Bi-Lo, filed for Chapter 11 bankruptcy protection in March.

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Nine West

Nine West Holdings filed for bankruptcy in April.

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Bertucci's

Italian casual-dining chain Bertucci's filed for Chapter 11 bankruptcy protection in April.

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Rockport

The footwear brand filed for Chapter 11 bankruptcy protection in May.

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National Stores

The owner of the Fallas chain of discount stores filed for bankruptcy in August.

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Brookstone

Brookstone filed for Chapter 11 bankruptcy protection in August.

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Samuels Jewelers

Samuels Jewelers filed for Chapter 11 with an agreement for bankruptcy financing in August.

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Toys R Us

Toys R Us filed for bankruptcy in September.

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Mattress Firm

Mattress Firm filed for bankruptcy in October.

Photo credit: PA

Sears

Sears filed for bankruptcy in October.

Photo credit: PA

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"The terms of the transaction were much less favorable than what we had agreed to," said John Ahn, president at Great American Capital Partners.

A Cyrus spokeswoman had no immediate comment.

A Sears spokesman declined to comment on the deal for the $350 million loan, which U.S. Bankruptcy Judge Robert Drain approved at the hearing.

The loan adds to $300 million that banks provided Sears when it filed for bankruptcy protection in October, giving the beleaguered retailer a total of $650 million in financing.

"These loans are going to benefit everybody," Drain said.

Hedge funds, including Cyrus, have been in talks with Sears over the past several weeks regarding financing to help it continue operating during bankruptcy proceedings, according to people familiar with the matter.

Sears' bankruptcy had been expected for years in light of a lengthy slump in sales since the 2008 financial crisis, seven straight years of losses and a debt load of some $5 billion.

In an attempt last year to avoid bankruptcy, Sears sold its Craftsman tool brand to power tool maker Stanley Black & Decker Inc for $900 million.

The Hoffman Estates, Illinois-based retailer also signed a deal to sell Kenmore appliances on Amazon.com Inc, the e-commerce site whose growing popularity with shoppers has been blamed by several brick-and-mortar retail chains for their hard times and bankruptcies.

Earlier this month, Sears won bankruptcy-court approval to advance plans to stay in business and find a buyer even as it evaluates offers from liquidators.

Some creditors have said Sears should consider winding down by letting liquidators sell its assets in the same way Sports Authority did two years ago and Toys "R" Us did this year when it shut all of its U.S. brick-and-mortar locations.

Sears has already said it intends to close about 180 stores while its chairman, Eddie Lampert, a billionaire who runs hedge fund ESL Investments Inc, works on a potential bid to keep Sears in business.

(Reporting by Mike Spector in New York and Jim Christie in San Francisco; Editing by Dan Grebler and Diane Craft)

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