Sears Gets Big Break With $2B Loan From Warren Buffett's Berkshire Hathaway
Berkshire Hathaway agreed to lend $2B to Seritage Growth Properties, the real estate spinoff of Sears Holding Co., the Wall Street Journal reports. The loan is separated into two parts: a $1.6B fixed-rate loan and an additional $400M that Seritage can take out until 2023.
Seritage owns a major portion of Sears real estate after spinning off from Sears Holding Co. in 2015. Sears Holding, which also owns Kmart, defaulted on a $500M loan earlier this year. Berkshire Hathaway's $2B credit loan will go toward paying off other debt Seritage has accrued.
With a mountain of debt obligations resulting in wave after wave of store closures to shed expenses, analysts believe Sears has been in danger of entering bankruptcy for some time. With its fate inextricably linked to Sears, Seritage saw its stock increase in value by 13% as of press time after news broke of Berkshire Hathaway's loan.
Berkshire Hathaway head honcho Warren Buffett already owns 5.7% of Seritage outright, rather than through the company, which WSJ noted is far from commonplace. Though $2B may seem like a big bet on a company that has fallen out of favor with shoppers and landlords alike, Berkshire Hathaway is reportedly dealing from a $100B war chest.