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With $1 Billion in Debt Repayment Looming, Sears Closing Another 63 Stores

Beginning the week by fully tapping into what remained of an available $200 million line of credit, Sears Holding (NYSE:SHLD) ended the week by announcing that it will close another 63 stores before those borrowings come due next spring.

The company notified employees at 45 Kmart stores and 18 Sears stores that their stores will be closing in late January 2018 but will remain open during the holiday sales season.

The stores are located in 26 states with Pennsylvania and Ohio accounting for a combined 12 of them, including the BigK store in Austintown, OH (pictured).

S&P Global Ratings this week lowered Sears’ credit rating deeper into junk territory from CCC+ to CCC. Sears Holdings Corp. has more than $1 billion of debt maturities in 2018.

“Although recent results have demonstrated some progress on cost reductions and the company has recently accessed new liquidity from related parties, we see addressing the 2018 third-party obligations, including about $717 million due June 30, 2018, under the term loan as critical to avoid a broader restructuring,” S&P said.

“The outlook is negative,” the ratings agency added. “We could lower the rating if we do not believe the company will make progress to address the mid-2018 maturities through a combination of asset sales or refinancing.”

Sears’ debt maturities are also significant in 2020, when more than $1 billion in loans are due.

“A turnaround depends on the company’s progress with integrating its retail strategy and announced cost-reduction plan to reverse losses and cash use. We believe the company retains significant unencumbered real estate it can use to generate liquidity, as it continues to demonstrate. Still, progress in stabilizing sales and reversing earnings declines are also important to avoid an eventual restructuring,” S&P noted.

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