Sears says Bank of America will not renew $1 billion letter of credit deal

By Laura Lutz

Des Moines, April 18 - Sears Holdings Corp. reported that Bank of America, NA said that it would not renew its $1 billion letter-of-credit agreement under its existing terms, according to an 8-K filing with the Securities and Exchange Commission.

The agreement is set to expire in July.

As of April 18, only $1.6 million of letters of credit were outstanding under the agreement. The deal provides only for letters of credit, not direct borrowings.

Almost all of Sears's outstanding letters of credit are issued under its $4 billion, five-year revolving credit facility expiring March 2010, which has a $1.5 billion letter of credit sub-limit, according to the 8-K.

As a result, Sears said it does not expect the termination of the letter-of-credit agreement to have any effect on its liquidity.

The company is evaluating whether or not it will replace the letter-of-credit agreement at this time.

The current letter-of-credit agreement is a 364-day secured facility with a commitment of up to $1 billion. The parties to the agreement are Bank of America; Sears Holdings; Sears Roebuck Acceptance Corp.; Sears, Roebuck and Co.; and Kmart Corp.

Based in Hoffman Estates, Ill., Sears Holdings is the parent of retailers Sears Roebuck and Kmart.

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