Item 2.03.
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Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance
Sheet Arrangement of a Registrant.
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As previously disclosed, on October 18, 2017, Sears Holdings Corporation (the Company), through Sears, Roebuck and Co., Kmart Stores of
Illinois LLC, Kmart of Washington LLC, Kmart Corporation, SHC Desert Springs, LLC, Innovel Solutions, Inc., Sears Holdings Management Corporation, Maxserv, Inc., Troy Coolidge No. 13, LLC, Sears Development Co. and Big Beaver of Florida
Development, LLC (collectively, Borrowers), entities wholly-owned and controlled, directly or indirectly by the Company, entered into a Second Amended and Restated Loan Agreement (the Second Amended and Restated Loan
Agreement), which amended and restated its Amended and Restated Loan Agreement, dated as of October 4, 2017 (the Amended and Restated Loan Agreement), with JPP, LLC and JPP II, LLC (collectively, the Lenders). On
October 4, 2017, pursuant to the Amended and Restated Loan Agreement, the Borrowers borrowed $100 million from the Lenders. The Amended and Restated Loan Agreement also provided that, subject to the satisfaction of certain conditions, up
to an additional $100 million could be drawn by the Borrowers prior to December 1, 2017. On October 18, 2017, pursuant to the Second Amended and Restated Loan Agreement, the Borrowers drew $40 million of such additional
$100 million from the Lenders.
On October 25, 2017, the Borrowers entered into an amendment (the Amendment) to the Second Amended
and Restated Loan Agreement, pursuant to which the Borrowers drew the remaining $60 million. The $200 million aggregate loan made under the Second Amended and Restated Loan Agreement in October 2017 matures on the later of
(1) April 23, 2018 and (2) the earlier of (x) the date the loans under the JPP/Cascade Loan Agreement (as defined below) are repaid in full and (y) the maturity date of the loans under the JPP/Cascade Loan Agreement
(including any extensions thereof in accordance with the JPP/Cascade Loan Agreement). All other loans under the Second Amended and Restated Loan Agreement continue to mature on July 20, 2020.
After giving effect to the $200 million loan, the aggregate principal amount outstanding under the Second Amended and Restated Loan Agreement was
$569.5 million. The $200 million loan has an annual interest rate of 11%, with accrued interest payable monthly, and no upfront or funding fees were paid. All of the loans under the Second Amended and Restated Loan Agreement are guaranteed
by the Company and secured by a first lien on 76 real properties. The $200 million loan is also secured by a second lien on 16 real properties owned by the Borrowers.
In connection with the $60 million draw described above, certain of the Borrowers entered into a Second Amendment, dated as of October 25, 2017 (the
Second Amendment), to the Amended and Restated Loan Agreement, dated as of May 22, 2017 (as previously amended July 3, 2017) (the JPP/Cascade Loan Agreement), with JPP, LLC, JPP II, LLC and Cascade Investments,
L.L.C., to add a cross-default provision and make certain other changes.
Mr. Edward S. Lampert, the Companys Chief Executive Officer and
Chairman, is the sole stockholder, chief executive officer and director of ESL Investments, Inc., which controls JPP, LLC and JPP II, LLC.
The foregoing
description of the Amendment and the Second Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is filed herewith as Exhibit 10.1 and is incorporated by reference herein and to
the Second Amendment, a copy of which is filed herewith as Exhibit 10.2 and is incorporated by reference herein.