A Sears logo is seen inside a department store in Garden City, New York, U.S., May 23, 2016. REUTERS/Shannon Stapleton
December 28, 2018
By Mike Spector, Jessica DiNapoli and Harry Brumpton
(Reuters) – Sears Holdings Corp Chairman Eddie Lampert has submitted a roughly $4.6 billion takeover bid for the bankrupt U.S. retailer, representing its only chance of escaping liquidation and laying off tens of thousands of workers, people familiar with the matter said on Friday.
The offer came after Sears’ existing lenders Bank of America Corp and Citigroup Inc, as well Royal Bank of Canada, which was not previously a lender, agreed to provide a $950 million asset-based loan and a $350 million revolving credit line to back Lampert’s bid, the sources said.
Lampert’s bid would preserve about 425 stores that Sears has yet to close, and secure the jobs of 50,000 workers out of the 68,000 employed by the retailer, the sources said.
Some of Lampert’s bid relies on $1.8 billion of Sears debt that his hedge fund ESL Investments Inc already holds and Lampert plans to forgive to back his offer, the sources said. The bid also has about $400 million in financing from non-bank lenders, according to the sources.
It is possible that Lampert’s bid for Sears will be rejected or otherwise fall through, the sources cautioned, asking not to be identified because the matter is confidential.
Sears, Lampert and representatives for the banks either declined to comment or did not respond to requests for comment.
A U.S. bankruptcy court judge must approve any sale of Sears. The judge 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 Amazon.com of its time.
But the iconic retailer gradually lost its shine as consumers increasingly favored brick-and-mortar rivals such as Walmart Inc and Target Corp and e-commerce.
Lampert, who through ESL is Sears’ biggest shareholder and creditor, formed Sears Holdings in 2005 by acquiring Sears Roebuck and combining it with discount chain Kmart, which he had also 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 building, and companies that included a radio station and Allstate insurance. But the company stopped turning a profit in 2011, and it gradually started to sell assets, such as its legendary Craftsman brand and many of its properties, to stay afloat.
Sears Holdings listed $6.9 billion in assets and $11.3 billion in liabilities in documents filed in the U.S. Bankruptcy Court in the Southern District of New York.
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.
(Reporting by Mike Spector and Harry Brumpton in New York, Jessica DiNapoli in Puerto Rico; Editing by Leslie Adler)
