Sears Holding Corp. said Friday Bank of America would not renew its $1 billion secured credit facility, but maintained there would be no impact on liquidity, according to a filing with the Securities and Exchange Commission.
Sears has only $1.6 million in outstanding letters of credit under the facility, which is scheduled to end in July.
"Substantially all of our outstanding letters of credit are issued under our $4 billion, five-year revolving credit facility — expiring March 2010 — which has a $1.5 billion letter of credit sublimit," Sears said in the filing.
"As we are now using our other facility — the $4 billion revolver — for substantially all our letter of credit needs, the termination...is not expected to have any effect on Sears Holdings' liquidity," the company said.
No early termination fees will be charged and the company, home to both the Sears and Kmart chains, has yet to decide if it will replace the expiring credit agreement.
Banks have tightened up significantly as Wall Street faces the meltdown in the subprime mortgage market and a slowing economy.
Borrowing money for everything from importing goods to making an acquisition has been harder as banks lay off workers and write off bad loans to shore up their balance sheets.
Sears reported fourth-quarter profits fell 47.5 percent as the company held an oversupply of inventory in apparel and cut prices in the face of slowing sales.
For the three months ended Feb. 2, net income dropped to $426 million, or $3.17 a diluted share, from $811 million, or $5.27, in the same period last year, on sales that slid 6.8 percent to $15.1 billion from $16.2 billion. Same-store sales decreased 4.5 percent.
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