Monday, March 16, 2009

Sears Trying To Extend Its Credit Facility

The company which recently lost bragging rights (at least in name) to the tallest tower in the west hemisphere, is working hard not to also lose access to precious liquidity. Sears Holdings is currently in the market to extend the March 2010 maturity of its $4 billion ABL through Bank of America and Wells Fargo. Eddie Lampert's brand name is expected to allow for not too much of a hair raising spread, as the new loan is rumored to be pricing around Libor + 400 with a Libor floor. Nonetheless, this is a dramatic increase in future interest expense, as the original 2005 ABL costs the company only L+40. Assuming a 200 bps Libor floor in line with recent precedents, the total annual interest expense on the facility is likely to increase by roughly $180 million. Sphere: Related Content
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