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Non-Tech : Sears Holdings Corp.
SHLD 31.370.0%Oct 8 12:00 AM EST

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To: Glenn Petersen who wrote (929)12/6/2018 7:45:31 PM
From: Glenn Petersen   of 951
Sears Chairman Edward Lampert bids $4.6 billion to rescue iconic retailer from bankruptcy

Lauren Zumbach
Chicago Tribune
December 6, 2018

The hedge fund run by Sears Chairman Edward Lampert is offering to buy much of Sears' remaining assets for about $4.6 billion. The bid includes about 500 Kmart and Sears stores. (Seth Wenig/AP)

The hedge fund run by Sears Chairman Edward Lampert is offering to buy many of the bankrupt retailer’s remaining assets for about $4.6 billion with hopes of keeping the chain in business and continuing to employ about 50,000 of its workers.

The bid from Lampert’s ESL Investments includes about 500 Sears and Kmart stores, headquarters and distribution centers, and Sears brands and businesses including Kenmore, DieHard and Sears Home Services.

“ESL believes that a future for Sears as a going concern is the only way to preserve tens of thousands of jobs and bring continued economic benefits to the many communities across the United States that are touched by Sears and Kmart stores,” Lampert’s hedge fund said in the letter sent to Sears’ investment banker Wednesday and filed Thursday with the U.S. Securities and Exchange Commission.

Hoffman Estates-based Sears Holdings Corp., which filed for Chapter 11 bankruptcy protection in October, got the Bankruptcy Court’s approval last month to begin auctioning assets, including a group of top-performing stores. The retailer previously received court approval to begin store closing sales at 142 unprofitable stores.

The 500 stores Lampert and ESL want to purchase include Sears locations in Bloomingdale, Chicago Ridge, North Riverside, Oak Brook, Schaumburg, West Dundee, Cherry Valley, Peoria and Fairview Heights and Kmarts in Bridgeview and Des Plaines. The bid also includes the headquarters in Hoffman Estates and other facilities in Manteno, Melrose Park, Naperville, Romeoville, Moline, Granite City and Bloomington.

The $4.6 billion offer includes up to $950 million in cash that would be funded by a new loan and a $1.8 billion credit bid, in which ESL would swap Sears debt it holds for ownership of a newly formed company. Other financing includes an estimated $1.1 billion from taking on Sears’ obligations to honor Sears Home Services protection agreements, gift cards, and loyalty program points.

In the letter, ESL said it believes long-struggling Sears can successfully reorganize around the smaller group of stores. The fund said it expects to continue employing about 50,000 Sears workers and reinstate a severance program in place before the company sought bankruptcy protection.

The holiday season can be do-or-die for retailers. That’s never been truer for Sears, which filed for bankruptcy protection in mid-October in a last-ditch bid to keep the American retail icon afloat.

The Hoffman Estates-based company has struggled for years, with a string of dismal holiday seasons....

The bid comes days after Sears filed an updated budget with the Bankruptcy Court showing the retailer expected to earn almost $246 million less during the critical holiday shopping season than it forecast when it declared bankruptcy. The more recent budget came after Sears said it planned to sell 505 stores that would continue in business, about 100 more than initially planned, which may have affected revenue forecasts.

ESL said the offer is contingent on its ability to acquire all the assets included in its bid since it believes they will perform better together, and that it would offer less if required to bid on assets separately. Sears has received a separate $60 million bid from for its home improvement business. Other parties have until Tuesday to place competing bids for that business or object to the sale, and an auction has been set for Dec. 13.

The fund also said it wants confirmation that it will be able to use a credit bid to finance the purchase and would require Sears to release it from any liability related to transactions between the retailer and the hedge fund prior to the bankruptcy filing.

A committee of Sears’ unsecured creditors has raised questions about financial dealings between Sears and ESL and Lampert, who was also the retailer's CEO prior to its bankruptcy filing. Both Sears and the creditors committee are looking into transactions between ESL and the retailer, including loans the hedge fund said amount to $2.4 billion over the past several years.

ESL’s offer would also depend on its ability to secure financing and the Bankruptcy Court’s approval.

Others interested in acquiring Sears’ assets have until Dec. 28 to submit bids under the timeline approved by the Bankruptcy Court. If other bids come in, the auction would be held Jan. 14.

Twitter @laurenzumbach

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