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Fitch: New concern for Sears
Fitch Ratings said it regards CIT Group's decision to discontinue vendor financing for Sears Holdings as an additional liquidity concern for the retailer in 2012, potentially boosting working capital requirements.
Based on a conversation with the company, Sears indicated to Fitch Ratings that other factoring firms continue to approve orders.
The agency said the CCC ratings on Sears, the current liquidity estimates and external financing expectations for 2012 assume no material changes in vendor credit terms.
The CIT decision, while affecting less than 5% of Sears' outstanding inventory, reduces the company's margin of safety with respect to cash needs as the company looks to avoid further erosion of EBITDA, Fitch said.
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