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Sears details up to $500 million standby letter-of-credit facility
By Tali Rackner
Norfolk, Va., Dec. 30 – Sears Holdings Corp. provided details of its up to $500 million secured standby letter-of-credit facility through Sears Roebuck Acceptance Corp. and Kmart Corp., according to an 8-K filing with the Securities and Exchange Commission.
At closing, $200 million of commitments were made available, and up to an additional $300 million may be obtained prior to the facility’s Dec. 28, 2017 maturity.
As previously reported, the facility was provided by JPP, LLC and JPP II, LLC, affiliates of ESL Investments, Inc., with Citibank, NA serving as administrative agent and issuing bank.
The letter-of-credit facility is guaranteed by the same subsidiaries of the company that guarantee the obligations under the third amended and restated credit agreement, dated July 21, 2015 with Bank of America, NA, as agent, according to the filing. It is secured by the same collateral as the credit agreement, as well as by certain real estate.
Sears and Kmart are required to reduce commitments upon the occurrence of certain events, including certain asset sales and other financing transactions.
To secure their commitment to participate in letters of credit issued under the facility, the lenders are required to maintain cash collateral on deposit with Citibank in an amount equal to 102% of the commitments.
The borrowers are required to pay the lenders an upfront fee equal to 1.5% of the amount of commitments provided under the letter-of-credit facility. In addition, the borrowers are required to pay a commitment fee of 5.75% per annum on the amount of the lender deposit (which may be increased from time to time in connection with establishing additional commitments), as well as certain other fees.
Sears is a Hoffman Estates, Ill.-based retailer.
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