Media Moves and News

Coverage: Lampert makes $4.4 billion bid to save Sears

December 31, 2018

Posted by Chris Roush

Sears Holdings Corp. Chairman Eddie Lampert submitted a $4.4 billion takeover bid for the bankrupt U.S. retailer, representing its only chance of escaping liquidation and laying off tens of thousands of workers.

Mike Spector, Jessica DiNapoli and Harry Brumpton of Reuters had the news:

Lampert’s bid is backed in part by $1.3 billion in financing from three different financial institutions, the spokesman for his hedge fund, ESL Investments Inc, said. It would preserve about 425 stores that Sears has yet to close, and secure the jobs of up to 50,000 workers out of the 68,000 employed by the retailer. An affiliate of ESL, Transform Holdco LLC, submitted the bid, the spokesman said.

People familiar with the matter said the financing comes from Sears’ existing lenders Bank of America Corp and Citigroup Inc, as well Royal Bank of Canada, which was not previously a lender, which together agreed to provide a $950 million asset-based loan and a $350 million revolving credit line.

Some of Lampert’s bid relies on $1.8 billion of Sears debt that ESL already holds and plans to forgive to back the offer, the sources said. The bid also includes about $400 million in financing from non-bank lenders, the sources said.

Lauren Hirsch of CNBC.com reported that unsecured creditors may object to the bid:

Unsecured creditors said earlier this month they will object to a credit bid. Those creditors believe there may be claims against Sears for transactions under Lampert’s leadership. Those deals include Sears’ spinoff of Lands’ End and transactions with Seritage Growth Properties, a real estate investment trust Lampert created through some Sears’ properties.

Sears declined to comment to CNBC for this story.

The company filed for bankruptcy on Oct. 15. At that time, it said it would close 142 unprofitable stores, then in November it announced the closure of 40 additional stores. On Friday, it disclosed plans to close 80 more stores, bringing the total closures to more than 260, or more than a third of its 700 or so stores.The 125-year-old company has more than 68,000 employees.

Once the nation’s biggest retailer, it was also its first “everything store,” stocking wares from jewelry to clothing, from hardware to prefabricated homes. But the department store industry has struggled over the past half-decade, as the mall has become less convenient and apparel more casual.

Laura Heller of Forbes.com reported that the deal could also be rejected by the board:

Lampert’s offer proposes to save 50,000 of the existing 68,000 jobs currently held at Sears. Details of the deal were not made public.

The deal could still be rejected by the board and even if accepted,  Sears limps into the New Year on shaky ground.

Will 2019, but the final year for the 125 year old company? There are plenty who thought it wouldn’t survive this long, after all, it’s often been called the longest going out of business sale in history. But regardless of how, Sears will remain as the intellectual property and brands undoubtably hold value and will sell, even after liquidation.

Sears, Die Hard, Kenmore and Craftsman will continue, either as stores or concepts. And for the time being at least, Lampert has a brief reprieve.

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