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Sears Chairman makes $4.4 bn bid to secure 50,000 jobs, keep retailer alive

Without the financing or another buyer, Sears faces the prospect of closing its doors for good and putting roughly 68,000 people out of work

Reuters 

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(Photo: @SearsHoldings)

Holdings Corp Chairman 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, a spokesman for the billionaire's hedge fund said on Friday.

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 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 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 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.

The bid contemplates assuming protection agreements Sears has previously sold to reassure customers who have bought appliances, televisions, lawn tractors and other big-ticket items, the ESL spokesman said.

"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 said. "Much work remains and there is no assurance our proposal will be completed."

Sears will now evaluate the bid to determine whether it is viable, and there remains a possibility the company could reject it, some of the sources said.

A Sears spokeswoman declined to comment. either had no immediate comment or did not immediately respond to requests for comment.

A must approve any sale of Sears. The will weigh the opinions of other stakeholders, including unsecured creditors who have argued they could recover more of their investment if the department store operator winds down.

Without the financing or another buyer, Sears faces the prospect of closing its doors for good and putting roughly 68,000 people out of work.

The 125-year-old retailer filed for bankruptcy on Oct. 15 and developed plans to restructure around the sale of 500 stores and businesses including Kenmore, DieHard and the company's home services division. Only Lampert's ESL offered to buy the entire company.

The only other bids Sears has received are from suitors interested in pieces of the company and liquidators prepared to run going-out-of-business sales at stores and shut down the retailer.

Sears dates back to the late 1880s. Its mail-order catalogs with merchandise ranging from toys, medicine and gramophones to automobiles, kit houses and tombstones made it the of its time.

But the gradually lost its shine as consumers increasingly favored brick-and-mortar rivals such as and and

Lampert, who through ESL is Sears' biggest shareholder and creditor, formed in 2005 by acquiring in an $11 billion deal and combining it with Kmart, which he had also taken over.

Lampert had pledged to restore Sears to its glory days, when it owned the in Chicago, then the world's tallest building, and that included a radio station and But the company stopped turning a profit in 2011, and it gradually started to sell assets, such as its legendary brand and many of its properties, to stay afloat.

listed $6.9 billion in assets and $11.3 billion in liabilities in documents filed in the in the Southern District of

The largest U.S. toy retailer, Toys 'R' Us, tried to emerge from its 2017 bankruptcy filing but was forced to liquidate six months later after creditors lost confidence in its turnaround plan.

 

 

First Published: Sat, December 29 2018. 14:44 IST
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