For those who think Berkowitz and eddies loans are outrageous look at this, the Nordstrom family tried to take their company private and the best loan they could get is 13% , for Nordstrom’s. Think about that next time someone on here is claiming eddies loans are robbing from the company.
https://www.bloomberg.com/news/articles/2017-10-17/nordstrom-lenders-demanded-interest-rate-the-family-couldn-t-pay
@3tot - The comparison being used to judge how successful SHLD and Nordstrom are is exemplified by this quote.
As McDonald’s founder Ray Croc famously said “When you’re green you’re growing and when you’re ripe, you rot.”
Nordstrom at this point in time is in the ripe stage.
SHLD at this point in time is in the rot stage.
Neither company at this point in time is in the green, or successful, stage.
1sna- Really? You want to use that comparison? How about we look and see that SHC stock has tanked from 122.41 in April 2007 to around 4 today. Or how about $12.88 in Nov. 2016 to around
$ 4 today. Or how about the debt to equity which stood at .4378 in April 2011 and as of July 2017 is -1.096.
Or how about the market cap which in Nov. 2013 was around 5.5 Billion and today stands at around 422 million. Shall I go on?
Comparing Sears business plan to Nordstrom...really?
@vup - "You actually think Nordstrom’s is not a success? Unbelievable." Yes, Nordstrom is doing much better than SHLD, however, like many retailers, they are facing some significant challenges. Nordstrom is not a booming company with significant growth prospects.
By Sharon Bailey
Nov 16, 2017 9:04 am EST
Impact of 3Q17 results
As of November 15, 2017, Nordstrom stock was rated a “hold” by 17 of 26 analysts (or 65%). The stock was rated a “buy” by four analysts and a “sell” by five analysts.
Following the fiscal 3Q17 results, many analysts revised their price targets for Nordstrom stock. On November 10, 2017, KeyBanc lowered its price target for the stock to $50 from $55. JPMorgan Chase cut its price target to $33 from $35. Cowen and Company cut its price target to $50 from $53. Deutsche Bank lowered its price target to $41 from $46. Telsey Advisory Group reduced its price target to $47 from $50. Susquehanna lowered its price target to $43 from $47. Bank of America Merrill Lynch cut its price target to $35 from $40. UBS lowered its price target for Nordstrom stock to $43 from $46.
There is a big difference in a loan that is trying to buy out a company to take it private and a loan that is collateralized with inventory and real estate. Also, it is not a bank lending Eddie the money, if it was they would probably be charging 18-20% becasue of the financial disaster SHC is. The money is being lent by Eddie (ESL) to Eddie (SHC). So he is lending himself money at 8-11% interest and not only getting the interest payments from SHC (you can find this in the financials) but also will get the real estate if SHC defaults.
Buying a companies debt is how Eddie bought Kmart and used that money to buy Sears.
Finance 101 people
Eddie definitely likes loans that are collateralized by real estate. If he wasn't fearful of bankruptcy he would buy out the 10/2018 bonds that are currently yielding over 35% http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?symbol=SHLD.JE&ticker=C560371
Or he could just buy out the rest of the other stock holders. Eddie and Bruce used to own north of 80% of the stock. SInce the market capitalization of Sears Holdings is less tha 500m and he might own around 40% is would only take 300m for him to buy the entire company.
My prediction is that he or Bruce will loan the company as much money as it takes to get more of their hands on any real estate of value and then declare bankruptcy.
You actually think Nordstrom’s is not a success? Unbelievable.
Good point OP
@kmh - We do...
Who cares...
Business Loan Advantages for Retailers
If your retail business is a proven success, First Financial can lower your business loan costs. You won’t find more robust business loan perks at any other lender:
Term loan rates that start at a low 5.99% annual interest rate (AIR).
Oh, the catch, your retail business must be a "proven success." Well, that would rule out SHLD and Nordstrom, however, I bet Walmart would qualify.