Sears shares at record low as retailer prepares to file for bankruptcy

Sears store in Garden City NY. REUTERS  Shannon StapletonMore

Sears store in Garden City NY. REUTERS Shannon StapletonMore

Sears Holdings adding a restructuring expert to its board, suggesting the ailing retailer may be preparing to take significant actions to survive or to protect its remaining assets.

Both Lampert and the Sears special committee now accept that only a court-supervised process can determine the company's future, one of the sources said.

Sears shares were down 31 per cent at 40.5 cents in afternoon trading in NY, giving the company a market capitalization of $40 million. But if Sears is now in touch with banks to secure the financing needed for a bankruptcy filing, as CNBC reported Wednesday morning, that could send the surest signal that such a move may not be so far off.

"I don't think it is an immediate drive to bankruptcy, but clearly the options are limited", said David Tawil, president and co-founder of Maglan Capital, which follows distressed companies.

The filing could come this week in anticipation of the company's $134 million debt due Monday, the Wall Street Journal reported.

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The announcement was made as Sears, led by CEO and Chairman Eddie Lampert, is nearing a key debt repayment in less than a week.

In May, shares got a short-lived boost following news that Sears was partnering with Amazon to provide automotive services to Amazon customers at Sears locations, as Business Insider reported. While the SPDR S&P Retail ETF (XRT) is up 6.5% year to date, and fellow department stores like Macy's (M), Kohl's (KSS), and Nordstrom (JWN) have climbed more than 30% since the start of the year, Sears has lagged-and how. Lampert had told the special committee he would not help the company fund that obligation unless it agreed to his plan, the sources said. Brand added that he had significantly cut down on his Sears bond holdings earlier this year amid concerns from his clients. When Toys "R" Us, the largest specialty toy retailer, filed for bankruptcy protection last September, it sought to emerge from it after restructuring its debt and shutting stores. Sears' borrowings totaled $5 billion as of August 4.

The Hoffman Estates, Illinois-based retailer has posted seven straight years of losses, while its sales have not grown since the 2008 financial crisis.

Mr. Lampert, a billionaire hedge-fund manager, has been publicly calling on the board to sell off the Kenmore appliance business and other units, which he has offered to purchase, and to restructure Sears's roughly $5.5 billion in debt.

Shares of real estate investment trusts (REIT) exposed to Sears properties also fell Wednesday.

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