Factoring News: Sears Reaches Agreement with Factors

The Wall Street Journal released some factoring news showing how working with Factors can help a company win big…even on Wall Street.

NEW YORK (Dow Jones)–Sears Holdings Corp. (SHLD) shares soared Friday as the retailer was said to be making the rounds to reassure its financing partners that it has the wherewithal and the desire to meet its obligations.

Shares were up 13% to $49.04 in recent afternoon trading, and have now gained 57% this month as positives from new financial plans with vendors mixed with talk the company could be taken over by its majority owner, Edward Lampert.

A Lampert representative didn’t immediately return a call for comment.

The retailer on Friday was said to have talked with a number of its larger factors about a new financial approach after talking first with CIT Group Inc. (CIT), a factor that pulled its funding last week amid uncertainties about Sears’s financial condition. Factors are financing firms that buy receivables from suppliers and collect the money from retailers once the goods are sold.

CIT was reported to have reinstated its financing agreement this week.

Representatives from Sears declined to comment. A CIT spokesman said the company does not comment on customers.

“Sears has come up with a financial vehicle to make factors more comfortable,” said an executive familiar with the arrangement. “There is a lot of renewed confidence in their ability to satisfy their vendors.” The executive declined to elaborate on the arrangement.

Another person close to the matter said an arrangement has been “placed on the table” and it was likely it would soon be put into effect.

Sears had tried to reassure suppliers it has adequate liquidity to operate its business, but that hasn’t done much to allay financiers’ fears, the suppliers said.

The factors were “worried about our financial exposure and that can’t be satisfied by conversations about liquidity,” said an executive at one New York-based factor. “We want shortened payment terms, more transparency into their finances, to know the value of their assets.”

Another executive of a factoring firm said he also had asked Sears for better payment terms and access to more information, but the company wouldn’t agree.

Reassuring vendors and their financial backers will be key to Sears’s future, analysts said.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com. -Ann Zimmerman contributed to this article.

Read the article at The Wall Street Journal.

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