Sears Holdings Corp. disclosed Dec. 12 that it entered into an agreement to extend the maturity of its existing $400 million term loan, which was originally in June 2018, to January 2019 with an option to further extend the loan maturity to July 2019.
The Illinois-based retailer repaid $325 million of its term loan during the fourth quarter, reducing the outstanding balance to $400 million and bringing its total term loan repayment during 2017 to $570 million.
Sears also plans to obtain a new secured credit facility of $407 million in connection with the agreement it reached with the Pension Benefit Guaranty Corp. on Nov. 7, which provides for the release of 138 of its properties from a ring-fence agreement with the PBGC. The new credit facility consists of a first-lien tranche of $407 million and a second-lien tranche of up to $200 million.
Sears intends to use the net proceeds to fund its pension plans and for general corporate purposes.
Sears CFO Rob Riecker said in a statement that the term loan extension will improve the company's short-term debt maturity profile, and the new credit facility is expected to strengthen its financial flexibility.
BofA Merrill Lynch facilitated the term loan extension and UBS Investment Bank is the financial advisor for the new credit facility.
