Sears Noose Tightens As CIT Leaves Company Cold With No Vendor Financings
Two weeks ago, when we first announced the catastrophic earnings preannouncement by Sears we noted that we were stunned "that as part of its preannouncement, Sears has decided it
would be prudent to provide an update on its credit facility status as
well as availability. As a reminder to anyone and everyone - there is no
more sure way of committing corporate suicide than openly inviting the vendors, saying the payables the firm had financed amounted to only
would be prudent to provide an update on its credit facility status as
well as availability. As a reminder to anyone and everyone - there is no
more sure way of committing corporate suicide than openly inviting the vendors, saying the payables the firm had financed amounted to only
about 5% of the retailer's inventory." Basically this means that the company Net Working Capital is about to go poof, as there will be nobody to finance the Receivable-Payable spread, SHLD will have to demand COD or even cash upfront, vendors will balk and switch to other, and slowly Sears will suffer an inventory liquidation stranglehold which will culminate with the company's bankruptcy unless Lampert provides a massive liquidity injection, which also however will have a brief impact, as the company is now perceived by all as Dead Man Walking. In other news, we are hearing that several bankruptcy advisors are already preparing the K-Mart pre-pack/freefall pitchbooks... all over again.
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