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Sears agrees to consider revised Lampert bid

Reuters  |  NEW YORK 

By and Mike Spector

(Reuters) - agreed on Tuesday to consider a revised takeover bid from Edward Lampert, temporarily staving off a liquidation that would have spelled the end of the 126-year-old U.S. department store operator.

Lampert's latest attempt to rescue Sears came after his previous $4.4 billion bid fell short, prompting the retailer to make liquidation preparations ahead of bankruptcy court hearing in on Tuesday.

An for Sears told U.S. Bankruptcy Judge that Lampert is expected to submit a revised offer for the retailer, along with a $120 million deposit, by 4 p.m. Eastern on Jan. 9. He did not disclose details of the new offer.

Drain said that Sears will consider Lampert's offer versus a potential liquidation during a bankruptcy auction on Jan. 14.

The development offers new hope that Sears could remain operational, albeit in smaller form, sparing the jobs of many of its 68,000 workers. Were Sears to liquidate its assets, it would become one of the most high-profile victims in the wave of bankruptcies that has swept the in the last few years, as the explosion in exacerbates the fierce price competition facing brick-and-mortar stores.

In a stark contrast between firms and many physical retailers, became the world's most valuable company for the first time this week, reaching a market capitalization of close to $800 billion.

PREVIOUS NEGOTIATIONS

A main point of contention in the negotiations between Lampert and Sears previously centred on whether Lampert's bid fully addressed the bankruptcy costs that Sears has racked up, according to sources familiar with the matter.

The costs, which include bills from lawyers and financial advisers, are expected to exceed $200 million, those sources said.

Lampert's bid proposed forgiving $1.3 billion of debt he holds in exchange for ownership of the reconstituted Sears, a bankruptcy manoeuvre known as a credit bid.

In addition, Lampert wanted a release from legal exposure related to a series of transactions he completed with the retailer before it filed for bankruptcy protection. Those made him the company's biggest creditor, in addition to its largest shareholder.

Lampert's offer did not include putting up cash to back the credit bid. That raised concerns in the negotiations since the manoeuvre might not be allowed in court, the sources said, given ongoing investigations of Lampert's pre-bankruptcy deals, which the maintains were proper.

Unsecured creditors have pushed for Sears to liquidate, partially because they contend they will realize a better financial recovery if it does. Those creditors, which include Sears landlords and bondholders, have also questioned Lampert's pre-bankruptcy transactions with the retailer.

Sears' bankruptcy, which includes Kmart, followed a decade of revenue declines, hundreds of store closures, and years of deals by billionaire Lampert in an attempt to turn around the company he put together in 2005 through an $11 billion deal.

Sears dates back to the late 1880s and its mail-order catalogues. Merchandise from toys, medicine, gramophones, automobiles, kit houses and tombstones made it the Amazon of its time.

The gradually lost its shine, however, as consumers turned to and brick-and-mortar rivals such as and Target Corp .

Lampert had pledged to restore Sears to its glory days, when it owned the tallest building in the world as well as a radio station and

But critics say Lampert let the stores deteriorate over the years, even as he bought the company's stock and lent it money.

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

(Reporting by and Mike in New York; Editing by and Nick Zieminski)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, January 09 2019. 00:23 IST
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