Sears soars as Lampert floats buying Kenmore, real estate

Edward Lampert is pushing for a more aggressive breakup of Sears Holdings Corp. as the hedge-fund manager aims to salvage what’s left of the struggling retailer and stave off a potential bankruptcy filing.

The announcement sparked a share jump of as much as 9 percent to $3.28 on Monday.

Lampert’s hedge fund, ESL Investments Inc., said selling the appliance maker Kenmore, home-improvement services and an appliance part-replacement business would improve the debt profile and liquidity of the beleaguered retailer, according to a statement from Sears. ESL would also be interested in making an offer for real estate — if requested by the retailer’s board. Lampert’s fund could then lease some or all of the stores back to the company.

ESL, the department-store chain’s largest shareholder, expressed interest in buying Sears assets for cash financed with equity contributions from ESL as well as thirdparty debt financing. The hedge fund’s non-binding proposal to acquire the home services and PartsDirect assets is based on a $500 million enterprise value, according to the letter.

ESL also made an offer for Sears real estate which includes the assumption of the $1.2 billion of debt obligations secured by the holdings.

Regardless of whether ESL becomes the ultimate buyer of Sears assets, the fund says that it is interested in seeing that Kenmore, SHIP and PartsDirect are divested in the near term in “a transaction that delivers the greatest value” for the company, ESL said in a statement to Bloomberg.

The deal would be in connection with the company’s exchange offer of 50 percent of about $600 million in outstanding second-lien debt, and a tender offer for about $900 million in unsecured debt. To assist with the potential transaction, Sears retained Moelis & Company as financial adviser and Cleary Gottlieb Steen & Hamilton LLP as legal counsel.