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Sears Holdings has announced plans to contribute hundreds of millions of dollars to employee pensions with the sale of 140 properties, according to the company.
“The struggling retailer said it expects to raise the $407 million in pension contributions by selling the properties or using them to secure financing before eventually selling them over the next two years,” the Chicago Tribune reports.
On Nov. 8, Sears Holdings announced the arrangement, which involves the federal Pension Benefit Guaranty Corp. releasing the Sears properties from an agreement prohibiting them from being sold. Next, Sears can use the properties to finance a $407 million contribution toward pensions for 100,000 participants, the company says.
“The company has consistently managed its business such that it is able to meet its pension obligations despite the prolonged low interest rate environment,” Sears reports. “Since the 2005 merger of Sears and Kmart, Sears Holdings has contributed approximately $4.5 billion to the pension plans, to cover what was initially a $1.8 billion deficit (on a GAAP basis).”
Sears has been fighting to return to profitability for years now, closing stores and selling its Craftsman tool brand as part of the process.
“Our recent actions further demonstrate our ability to manage our business while meeting our financial obligations,” chief financial officer Rob Riecker says. “We continue to review our capital structure to maximize our additional financial flexibility. In addition, we will continue to evaluate alternatives to meaningfully reduce cash interest payments in 2018.”
