Fitch downgrades Sears

Fitch Ratings said it downgraded the long-term issuer default ratings on Sears Holdings Corp., Sears Roebuck Acceptance Corp. and Kmart Corp. to D from CC following the company's announcement that it has filed for Chapter 11 bankruptcy protection.

The company's prepetition senior secured ABL lenders are providing up to $1.83 million senior secured superpriority priming DIP ABL facility, with $300 million of new incremental commitments.

In addition, the company is negotiating a $300 million junior DIP financing with ESL Investments, Inc.

“The bankruptcy comes on the heels of Sears underperforming its largest retail peers within the department store, discount and big-box specialty retail segments since Kmart and Sears, Roebuck and Co. merged under the entity Sears Holdings Corp. in March 2005,” Fitch said in a news release.

“The multi-year top line market share and EBITDA declines have resulted in high cash burn since 2013, which has necessitated significant liquidity infusion via asset sales and secured debt. This has led to long-held concerns regarding the company's competitive viability.”

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