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Sears gets more time to pay creditors

Sears Holdings Co. has negotiated more time to pay creditors. | Getty Images

Sears Holdings Co. has negotiated more time to repay debt and to shift retiree pension payments to an outside firm.

The struggling Hoffman Estates-based retailer gets to delay repayment of $400 million to creditors for six months. Sears also has worked out a deal for MetLife to pay about $515 million in pension payments for 51,000 retirees, the company announced Tuesday.

The company said the agreements will help it reach goals of reducing its debt and pension obligations by $1.5 billion this year.

Sears will pay $100 million in July to a group of creditors that includes Bill Gates’ Cascade Investment. The remaining $400 million will be due in January 2018 but could be extended another six months.

The company, which owns the Sears and Kmart chains, has closed stores and sold or licensed iconic brands such as Craftsman and Kenmore in an effort to stay afloat. CEO Eddie Lampert recently blasted a Craftsman power tool supplier for trying to take advantage of Sears’ situation to get out of its supply contract.

Of the deal with MetLife, Bloomberg Intelligence credit analyst Noel Hebert said for employees that transfer pension risk “where it ‘helps’ is that they don’t have to worry about their assets keeping up with the growth on the liability side.” He added that the retailer remains underfunded on overall pension obligations.

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