Sears Holdings comps at Sears and Kmart for the first two months of 4Q17 have declined in the range of 16-17%; raised $100 million in new financing and is pursuing an additional $200 million from other counterparties; amends second lien notes; announced new cost reduction (3.13)
Adjusted EBITDA is expected to be between $(70) million and $(10) million for the fourth quarter of 2017 compared to $(61) million in 4Q16.
- In addition, co expects a net loss attributable to Sears Holdings' shareholders of between $320-200 million in 4Q17, compared to a net loss attributable to Sears Holdings' shareholders of $607 million in the prior year fourth quarter.
Sears Holdings has amended the borrowing base definition in the indenture relating to the Company's second lien notes, maturing October 15, 2018, to change the advance rate for inventory to 75%, increased from 65%.
- The amendment also defers the collateral coverage test for purposes of the repurchase offer covenant in such indenture and restarts it with the second quarter of 2018 (such that no collateral coverage event can occur until the end of the 3Q18).
- Sears Holdings has also initiated a series of financial transactions to raise an incremental $300 million in new liquidity. The Company has already received a $100 million term loan, supported by ground leases and select intellectual property.
- In addition, the Company is in discussions with certain lenders regarding additional transactions to enhance its liquidity and strengthen its balance sheet through a series of agreements that would improve the terms on potentially more than $1 billion of its non-first lien debt, including significantly reducing cash interest expense and extending the maturity of some of that debt.
The Company has identified $200 million of cost savings, unrelated to store closures.
- Sears Holdings will also benefit from cost reduction activities undertaken in the 2017 fiscal year, including additional store closures announced in January 2018.