HOFFMAN ESTATES, Ill., Dec. 29 (UPI) -- Struggling retailer Sears announced Thursday it secured a $200 million loan from a hedge fund managed by CEO Eddie Lampert to backstop payments to vendors.
The retail chain has sustained billions in debt over the past eight years and the $200 million ensures the company will continue to be able to meet financial obligations in the short term as it works to turn around slumping sales.
Bloomberg reported the loan could expand to up to $500 million, pending approval by lenders.
Analysts said it is a bad sign Sears needs to float a loan just after the holiday shopping season, when retailers are typically flush with cash. Analysts also told Bloomberg it is a troubling sign Lampert, the company's CEO, appears to be the only individual willing to loan Sears money to keep it afloat. Earlier this month, Sears reported a quarterly loss of $748 million, bringing its total debt load over the past eight years to $9.3 billion. Revenue in the most recent quarter fell by 13 percent to $5 billion.
Business Insider reported this week Sears, which also owns Kmart, plans to close more than 30 stores in a bid to downsize and save money. The locations are expected to begin liquidation sales in January and close by March or April. The company closed more than 200 Sears and Kmart stores in 2016, bringing the total remaining to about 1,500 locations nationwide.
News of the loan brought a short-term rally to Sears stock. Shares increased to about $8.50 by midday Thursday.