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Nearing bankruptcy, Sears closes in on a deal to stay alive until Christmas

CNBC logo CNBC 10/12/2018
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As Sears Holdings heads toward an imminent bankruptcy filing, the struggling retailer is nearing a deal with lenders that could keep it alive through Christmas, people familiar with the matter tell CNBC. 

Such a deal would allow Sears to keep open some of its roughly 900 stores for at least a little bit longer, these people say. The goal would be to stay open until at least Christmas with a hope of finding a buyer while Sears is in bankruptcy, the people said. 

As part of the deal, Sears would shutter some of its stores immediately. The exact number of closures is still being negotiated. It is unclear how the closures would impact Sears' roughly 90,000 workers. 

Sears has not yet finalized a buyer for the business. It will likely seek one after filing for bankruptcy. 

The retailer is in talks to initially raise $300 million to $500 million to support its holiday operations, the people said. That amount may increase over time. 

Even if Sears finalizes financing to make it through the holidays, challenges remain. Over the past decade, Sears has had just one quarter of positive same-store sales. It has sold off or spun off its most-prized brands and valuable real estate. Thinning cash flow has left it with little money to reinvest in the company itself, letting it become more irrelevant as new competitors like Amazon rise. 

Retailers like Toys R US have entered bankruptcy planning to emerge only ultimately liquidate their business, unable to quickly right past wrongs so for past their declines. 

Sears still has some valuable business, like its storied Kenmore appliance brand and home improvement division. Eddie Lampert's hedge fund, ESL Investments, in August made a bid to buy the brands, but the deal has not yet been granted approval by the special committed appointed to oversee it.

The committee has not formerly rejected Lampert's offer, a person familiar with the matter said.

The people, who requested anonymity because the information is confidential, cautioned the negotiations are in flux and no deal has yet been formalized.

Sears did not immediately respond to a request for comment.


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