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Sears borrows $125 million FILO term loan, amends second-lien loan
By Sarah Lizee
Olympia, Wash., March 23 – Sears Holdings Corp., together with Sears Roebuck Acceptance Corp. and Kmart Corp., borrowed on Wednesday a $125 million first-in, last-out secured term loan due July 20, 2020 under its existing first-lien asset-based credit agreement, according to an 8-K filing with the Securities and Exchange Commission.
The FILO loan bears interest at Libor plus 850 basis points, subject to a floor of 1.5%.
The borrowers are required to pay an early repayment premium of the greater of a make-whole through eight months and 3% in the event the FILO loan is repaid within the first year and 2% in the event the FILO loan is repaid within the second year.
Additionally, the company said it entered into a fourth amendment to its second-lien credit agreement.
The amendment provides that interest on the $300 million principal amount term loan outstanding under the agreement may, at the borrowers’ option, be paid by increasing the principal amount of the second-lien term loan.
The amendment also provides that the company’s obligations on the loan may be converted into shares of the company’s common stock, par value $0.01, at the option of the lenders at a conversion rate of 200 shares of common stock per $1,000 in principal amount of outstanding debt under the loan.
Obligations under the loan are mandatorily convertible into common stock at the option of the company at the term loan conversion price within 30 days following the end of any period of 30 consecutive trading days, ending on or after July 2, during which the volume weighted average trading price of common stock on the Nasdaq exceeds $10.00 for a period of 20 trading days.
Sears is a Hoffman Estates, Ill.-based retailer.
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