Sears chairman submits new $5-billion bid to save retailer from liquidation

Marco Green
January 12, 2019

While competitors such as Walmart and Target usually operate stand-alone stores, Sears has usually been an anchor in shopping malls, which have seen dramatic declines in customer traffic.

Eddie Lampert's ESL Investments is sweetening its offer to keep Sears Holdings business, outlining a US$5-billion plan to buy the retailer out of bankruptcy.

The revised offer was submitted along with a $120 million cash deposit with an escrow agent selected by Sears. The chain, which includes Kmart discount stores, had chose to ask a USA bankruptcy judge to pursue liquidation Tuesday morning, before giving Lampert more time to improve his offer.

"They need to get the bid as close as possible to the liquidation analysis, and then Lampert can also play his trump card of saving thousands of jobs".

Sears Chairman Eddie Lampert is upping the ante in his effort to buy the bankrupt retailer he ran for almost half a dozen years.

Lampert has agreed to assume tax and vendor bills Sears has incurred since filing for bankruptcy protection in October past year that amounts to over $600 million, the filing from an affiliate of the billionaire's hedge fund ESL Investments showed. The bid will be accessed against liquidation offers to determine where the most value for the company stands.

Sears Holdings was headed to liquidation after ESL's first offer was spurned, but negotiations that revolved around a court hearing on Tuesday resulted in Lampert, who remains the retail company's biggest shareholder and chairman, getting another go.

A group of Sears creditors, including some landlords and vendors, has been calling for the chain to shut its doors for good, saying they will recover more money in that scenario.

ESL's sweetened bid includes as much as $166 million to pay stiffed suppliers, $139 million to cover expenses tied to the costly bankruptcy process and another $43 million for additional severance costs, the last of which was welcomed by worker advocates. The hedge fund will also assume $135 million in tax bills for properties that Lampert hopes to acquire as part of his bid.

Lampert said in a January 9 letter accompanying the filing that ESL is still working with lenders to finalize a US$175 million secured real estate loan.

ESL and hedge fund Cyrus Capital Partners LP, which was a creditor of Sears before its bankruptcy, will also provide debt financing, including a new real estate loan, according to the filing.

Other reports by Click Lancashire

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