Sears Chair Lampert makes $4.4 billion bid to keep retailer alive By Reuters

By Mike Spector, Jessica DiNapoli and Harry Brumpton

(Reuters) – Sears Holdings Corp Chairman Eddie Lampert submitted a $4.4 billion takeover bid for the bankrupt U.S. retailer, representing its solely likelihood of escaping liquidation and shedding tens of 1000’s of employees, a spokesman for the billionaire’s hedge fund stated on Friday.

Lampert’s bid is backed partially by $1.3 billion in financing from three completely different monetary establishments, the spokesman for his hedge fund, ESL Investments Inc, stated. It would protect about 425 shops that Sears has but to shut, and safe the roles of up to 50,000 employees out of the 68,000 employed by the retailer. An affiliate of ESL, Transform Holdco LLC, submitted the bid, the spokesman stated.

People acquainted with the matter stated the financing comes from Sears’ present lenders Bank of America Corp (NYSE:) and Citigroup Inc (NYSE:), as effectively Royal Bank of Canada, which was not beforehand a lender, which collectively agreed to present a $950 million asset-based mortgage and a $350 million revolving credit score line.

Some of Lampert’s bid depends on $1.8 billion of Sears debt that ESL already holds and plans to forgive to again the supply, the sources stated. The bid additionally contains about $400 million in financing from non-bank lenders, the sources stated.

The bid contemplates assuming safety agreements Sears has beforehand offered to reassure clients who’ve purchased home equipment, televisions, garden tractors and different big-ticket gadgets, the ESL spokesman stated.

“Factoring for all considerations, we believe that our going concern bid provides the best path forward for the company, the best option to save tens of thousands of jobs and is superior for all of Sears’ stakeholders to the alternative of a complete liquidation,” the ESL spokesman stated. “Much work remains and there is no assurance our proposal will be completed.”

Sears will now consider the bid to decide whether or not it’s viable, and there stays a risk the corporate might reject it, a few of the sources stated.

A Sears spokeswoman declined to remark. Bank representatives both had no fast remark or didn’t instantly reply to requests for remark.

A U.S. chapter courtroom decide should approve any sale of Sears. The decide will weigh the opinions of different stakeholders, together with unsecured collectors who’ve argued they may get well extra of their funding if the division retailer operator winds down.

Without the financing or one other purchaser, Sears faces the prospect of closing its doorways for good and placing roughly 68,000 folks out of labor.

The 125-year-old retailer filed for chapter on Oct. 15 and developed plans to restructure across the sale of 500 shops and companies together with Kenmore, DieHard and the corporate’s residence companies division. Only Lampert’s ESL supplied to purchase all the firm.

The solely different bids Sears has acquired are from suitors concerned about items of the corporate and liquidators ready to run going-out-of-business gross sales at shops and shut down the retailer.

Sears dates again to the late 1880s. Its mail-order catalogs with merchandise starting from toys, drugs and gramophones to vehicles, package homes and tombstones made it the Amazon.com Inc (NASDAQ:) of its time.

But the long-lasting retailer step by step misplaced its shine as shoppers more and more favored brick-and-mortar rivals equivalent to Walmart (NYSE:) Inc and Target Corp (NYSE:) and e-commerce.

Lampert, who by way of ESL is Sears’ greatest shareholder and creditor, shaped Sears Holdings in 2005 by buying Sears Roebuck in an $11 billion deal and mixing it with low cost chain Kmart, which he had additionally taken over.

Lampert had pledged to restore Sears to its glory days, when it owned the Sears Tower in Chicago, then the world’s tallest constructing, and corporations that included a radio station and Allstate (NYSE:) insurance coverage. But the corporate stopped turning a revenue in 2011, and it step by step started to promote belongings, equivalent to its legendary Craftsman model and lots of of its properties, to keep afloat.

Sears Holdings listed $6.9 billion in belongings and $11.3 billion in liabilities in paperwork filed within the U.S. Bankruptcy Court within the Southern (NYSE:) District of New York.

The largest U.S. toy retailer, Toys ‘R’ Us, tried to emerge from its 2017 chapter submitting however was pressured to liquidate six months later after collectors misplaced confidence in its turnaround plan.