Sears says credit pact with Bank of America to end
NEW YORK (Reuters) - Retailer Sears Holdings Corp (SHLD.O) said on Friday a credit agreement with Bank of America Corp (BAC.N) would come to an end after the bank would not agree to renew it under existing terms.
Shares of Sears fell 3 percent in after-hours trading after it said in a U.S. Securities and Exchange Commission filing that the secured credit agreement would end in July.
Sears, controlled by hedge fund manager Edward Lampert, said the termination of the agreement was not expected to have any effect on its liquidity. The agreement was for a 364-day secured facility with a commitment amount of up to $1 billion.
A Bank of America representative did not immediately return a call seeking comment.
Sears said $1.6 million in letters of credit were outstanding under the agreement, while substantially all of its outstanding letters of credit were issued under a $4 billion, five-year revolving credit facility that expires in March 2010.
While the credit agreement was not one of Sears's largest, the banks' decision not to renew it comes after two other retailers ran into credit troubles this week.
Shares of women's clothing retailer Talbots Inc (TLB.N) fell nearly 40 percent in the two days after it disclosed Bank of America and HSBC (HSBA.L) would stop providing it letters of credit. Home goods retailer Linens n' Things, which is trying to restructure its debts, said on Friday it was working with recently formed committees of its noteholders and vendors.
The company, created by the merger of Kmart and Sears, Roebuck in 2005, has been hurt by increased competition, the crumbling of the U.S. housing market and the credit crunch which has put a damper on consumer spending. The company said in February that fourth-quarter profit fell 47.5 percent.
In after-hours trading on Friday, shares of the company fell to $101.33 from a close of $104.72 on the Nasdaq.
(Additional reporting by Phil Wahba in New York and Alexandria Sage in Los Angeles; Editing by Braden Reddall)
