Sears reaches agreements to reduce its debt burden

Sears Holdings Corp. said Tuesday it has reached agreements to extend part of its $500 million 2016 secured loan facility and annuitize $515 million of its pension obligations, as it continues to work to reduce its debt burden. The troubled department store chain said some of its subsidiaries have agreed to repay $100 million of the secured loan facility at its original maturity in July and to extend the maturity of the rest of the loan to January 2018. The agreement includes an option to extend the maturity for another six months, pushing it back to July of 2018. The company has entered a separate agreement with Metropolitan Life Insurance Company, under which that company will pay future pension benefits to about 51,000 retirees. "This action is expected to have an immaterial impact on the funded status of our total pension obligations, but will serve to reduce the size of the company's combined pension plan, future cost volatility and plan administrative expenses," the company said in a statement. Sears is aiming to reduce debt and pension obligations by $1.5 billion in fiscal 2017. Shares were not yet active in premarket trade, but are down 15.5% in 2017, while the S&P 500 has gained 7%.

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