Sears shares fall below $1 as key debt deadline nears

  • Sears' stock hits an all-time low below $1 as the department store chain is running out of time to stay afloat.
  • Now, there's the risk that shares could be delisted from Nasdaq.
  • Sears meanwhile has a large debt payment hanging over its head next month.
A worker holds a sign announcing a store-closing sale outside the 60-year-old Sears store in Chicago.
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A worker holds a sign announcing a store-closing sale outside the 60-year-old Sears store in Chicago.

Shares of Sears Holdings fell below $1 for the first time on Friday morning, hitting an all-time low as the department store chain is running out of time to stay afloat.

The stock was last down roughly 9 percent to trade around $0.92.

The tumble follows a proposal earlier this week from CEO Eddie Lampert's hedge fund, ESL Investments, to restructure the company in order to avoid bankruptcy. A large debt payment is hanging over Sears' head next month. Time is running short, as Sears previously disclosed it faces "significant near-term liquidity constraints" pertaining to debt maturity reserve requirements it must meet by this upcoming Monday. The reserve is associated with a note that has a $134 million maturity due on Oct. 15.

Now, on top of that, there's the risk that Sears' stock could be delisted. Its shares are traded on the Nasdaq, which has a $1 bid price requirement for shares and notifies companies once their stocks trade for 30 days consecutively below that threshold, according to Nasdaq's website. From there, companies are typically afforded a "compliance period" of 180 days to meet Nasdaq's requirements again. A second, 180-day compliance period is sometimes afforded, Nasdaq's website says.

The department store chain's shares have fallen more than 85 percent over the past 12 months, bringing the retailer's market cap to less than $110 million. The stock hit an all-time high of $195.18 in April 2007, but sales began to deteriorate in the quarters thereafter.

The Hoffman Estates, Illinois-based company has shuttered hundreds of stores within the past few years as its sales tumble at a double-digit percentage rate, while Sears also has been burdened by its heavy debt load and pension liabilities. Lampert continues to look for ways to sell off assets to come up with cash.

Just last month, Sears said it would be closing another 46 stores across the U.S. in November. It's still in the midst of evaluating a deal separate from Monday's proposal where Lampert would use his hedge fund vehicle, ESL Investments, to buy the Kenmore brand — arguably one of the most valuable assets the retailer has left — from the department store chain for $400 million.

"The company is looking for ways to increase liquidity, but that continues to be challenging," Moody's senior analyst Christina Boni told CNBC. "Albeit they've had some success improving their maturity profile, the company is still not generating cash flow."

WATCH: Sears is fighting for its life