(Bloomberg) — Sears Holdings Corp. rose as much as 13 percent in early trading after lining up $200 million in credit to help fund the struggling retailer’s operations.
The company has a secured letter of credit that could be expanded by as much as $300 million with the consent of lenders, according to a statement Thursday. Affiliates of ESL Investments Inc., a firm run by Sears Chief Executive Officer Eddie Lampert, is providing the funding through Citigroup Inc.
The move signals that Lampert remains committed to bankrolling Sears, even as the department-store chain suffers from dwindling sales and billions in red ink. After acquiring the once-mighty retailer more than a decade ago, he has sold off brands and real estate in a bid to return the company to profitability. The hedge fund manager, who is also Sears’s biggest investor, became CEO of the business almost four years ago.
The stock jumped as high as $9.25 in premarket trading following Sears statement Thursday. The shares lost more than 60 percent of their value this year before the rally.
Earlier this month, Sears reported another huge quarterly deficit -- $748 million -- bringing its total losses $9.35 billion in the past eight years. The company needs to raise about $1.5 billion to make it through 2017 comfortably, according to Christina Boni, an analyst at Moody’s Investors Service.
Sears Chief Financial Officer Jason Hollar said in Thursday’s statement that the company has “numerous options” for financing.
“We will take actions to adjust our capital structure, generate liquidity and manage our business to enable us to execute on our transformation while meeting all of our financial obligations,” he said.
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