News that Sears Holdings (NASDAQ:SHLD) had lined up a new credit facility sent shares of the company dramatically higher Thursday, Dec. 29. The company closed on Dec. 28 at $8.18 and rallied on the news of the new line of available borrowing to close the next day at $9, a 10% gain. The stock gained on the idea that the company behind Sears and Kmart had bought itself a little time even if the money it now has access to will not cover its 2017 debt-servicing needs.

Sears has struggled to lure customers in recent years. Image source: author.

How bad off is Sears Holdings?

Sears Holdings has been bleeding red ink. The company posted a loss of $748 million in its fiscal third quarter this year, up from a $454 million loss in Q3 2015. In addition, revenue dropped by $721 million in Q3. Some of that comes from the chain having fewer Sears and Kmart stores open; having fewer locations did not boost the remaining ones. Instead, comparable-store sales suffered a 7.4% decline, accounting for $304 million of the revenue drop.

Those are bad numbers and there's no reason to expect the company to reverse those fortunes in Q4. CEO Eddie Lampert, whose hedge fund loaned the company $300 million in August, has pushed the idea that the company can stabilize by closing unprofitable stores and focusing on its Shop Your Way digital platform. But little has happened to show that Lampert's vision will come true. Sears has already lost $1.61 billion through three quarters in 2016, after losing $7.1 billion over the four previous fiscal years.

How much does Sears Holdings need?

The new credit line Sears has lined up guarantees the company $200 million in credit. That line can be expanded by up to another $300 million if the company and the lender agree. The money is coming from affiliates of ESL Investments Inc. -- a firm run by Lampert, which is providing funding through Citigroup.

This money, which is actually just a promise of funds designed to convince vendors to keep supplying the company, represents only a small piece of what Sears Holdings needs to make it through the year. The chain must raise about $1.5 billion to make it though 2017 comfortably, according to Moody's Analyst Christina Boni, as reported by Bloomberg.

"As Sears Holdings has consistently shown, we will take actions to adjust our capital structure, generate liquidity and manage our business to enable us to execute on our transformation while meeting all of our financial obligations," said CFO Jason Hollar in a press release. "This new standby letter of credit facility further demonstrates that Sears Holdings has numerous options to finance our business strategy."

What does Sears Holdings do next?

While its CFO says Sears has numerous options to fund its turnaround, in reality the best move to pay its debt would be to sell off all or some of its Kenmore, Craftsman, and DieHard brands as well as its Home Services installation and repair businesses.

It's hard to know exactly how much those brands and services are worth, but Craftsman alone could fetch as much as $2 billion, according to an October Bloomberg article. At that time, there were reportedly multiple companies interested, with bids expected in November. That never materialized, which suggests that either the offers were not high enough or none were made.

Still, it's likely that Sears could sell off those brands and raise the money it needs to keep going, at least in the short term. The problem, of course, is that raising capital via one-time asset sales does not change the company's fundamental issue -- it does not have enough customers.

Sears Holdings, as it currently stands, still has assets and it can forestall its death, but that end still seems to be just a question of time. Lampert has insisted that closing stores and building out Shop Your Way offers his company a future, but nothing in Sears' financials suggest that to be true.