Hedge fund ESL Investments, of which Sears Holdings Corp. CEO Eddie Lampert is the founder, chairman, and CEO, is giving the retailer a $400 million loan secured by a first priority line on Sears-owned real estate, according to a filing with the Securities and Exchange Commission.
The loan will come due at the end of the year, though that may be extended to February if there’s no default.
ESL’s loan comes after credit agency Fitch cut the retailer’s credit rating and warned that it may not have the cash to operate beyond 2016.
Sears last week defended its liquidity and prospects after Fitch’s credit downgrade, though this loan shows how the retailer is struggling with cash flow ahead of the holiday shopping season.
But, it also comes on the heels of think tank L2’s rating of Sears’s web, social media, and mobile capabilities as “genius.” Perhaps ESL's last-minute loan can help Sears make good on that kind of potential.