Somebody mentioned this in another thread, and it got me wondering. How low does Sears stock need to go before all hell breaks loose?
We came as low as $2.18 last week, but the stock seems to be rebounding and is close to $2.8 now. However, when (and it is a when, not if) it starts sliding again, what is the minimum before it's all over?
Vendors control everything. If any vendors have a clue they would not ship anything to SHC unless they pay cash up front
Agree with the previous comments, one additional thought. Credit managers at vendors watch the financials very closely. So when the stock price goes down, or the ratings agencies lower SHLD debt rating, the credit managers are more likely to tighten credit. You can see how vendors are reacting by looking at the current liabilities and how accounts payable has shrunk inordinately - this is due to the credit managers demanding cash. The longer this goes on, the more credit managers will restrict shipments to SHLD, which doesn't help sales improve for sure.
Stock price means nothing when one person or companies that that person has a stake in owns most of the stock.
"the PBGC would obtain certain properties as collateral as a mechanism to ensure the integrity of the pension obligations. I don't think that has ever happened"
I think it kind of did - that sounds like the REMIC arrangement. The infamous repeatedly-misunderstood list of 140 properties. The PBGC doesn't own/sell them, but they require Sears to give the proceeds from any sales of those properties to the pension fund. And, as I've explained repeatedly in threads asking about this for months, when those buildings are sold it doesn't mean the store closes (for the ones on that list that even still have an operating store in them), most buyers will not have a new tenant lined up and will just be collecting lease rent from Sears until Sears can no longer afford to pay it.
Nobody really knows at this point. A year or two ago, analysts were saying something about a springing lien by the PBGC if the stock fell below $9, and the PBGC would obtain certain properties as collateral as a mechanism to ensure the integrity of the pension obligations.
I don't think that has ever happened, and obviously, the stock is well below $9 and has been for some time, though it is possible that the sale of Craftsman and the resulting payout into the fund may have staved off the springing lien, but I may be wrong.
Basically, the stock price has little to do with bankruptcy. It is whenever the company is in substantial arrears with creditors, cannot obtain lines credit or when suppliers cut off shipments and/or make demands for payment for the goods in advance. Those factors do have an effect on the price per share, but a decreasing share price does not automatically mean bankruptcy.