TO CLOSE

With the closing of Sears stores amidst a mountain of debt, the end could be close for the iconic American retailer, and many of us are not ready.
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Entry to Sears Store(Photo: Sears Holdings)

Actions of Sears Holdings fell below $ 1 for the first time on Friday morning, reaching a record low while the chain of department stores is quick to stay afloat.

The stock was down about 9% to trade around $ 0.92.

The fall follows a proposal made earlier this week by Eddie Lampert's hedge fund, ESL Investments, to restructure the company in order to avoid bankruptcy. A big debt payment weighs on Sears next month. Time is running out as Sears has already indicated that it faces "significant short-term liquidity constraints" in terms of its required debt maturity requirements next Monday. The reserve is associated with a note whose deadline is set at $ 134 million on October 15.

On top of that, Sears shares may be written off. Its shares are traded on the Nasdaq, which requires a $ 1 bid price for shares and notifies companies once their shares are traded for 30 days consecutively below this threshold, according to the Nasdaq website. From there, companies typically benefit from a 180-day "compliance period" to meet the Nasdaq requirements. A second compliance period of 180 days is sometimes granted, according to the Nasdaq website.

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The department store chain's shares have fallen more than 85% in the past 12 months, bringing the retailer's market capitalization to less than $ 110 million. The stock hit a record high of $ 195.18 in April 2007, but sales began to deteriorate in the following quarters.

The Hoffman Estates, Illinois-based company has closed hundreds of stores in recent years as its sales have dropped to a double-digit percentage rate. Lampert continues to look for ways to sell assets to generate cash.

Last month, Sears announced it would close another 46 stores in the United States in November. It is still evaluating an agreement separate from Monday's proposal that Lampert would use its hedge fund vehicle, ESL Investments, to buy the Kenmore brand – arguably one of the retailer's most valuable assets – from the chain of department stores for $ 400. million.

"The company is looking for ways to increase liquidity, but it continues to be difficult," CNood's Christina Boni, senior analyst at Moody's, told CNBC. "Even though they have managed to improve their maturity profile, the company still does not generate cash flow."

Lauren Hirsch of CNBC contributed to this report.

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