Sears chair­man sub­mits new $5bn bid to save bank­rupt re­tailer

Business a.m. - - WORLD BUSINESS & ECONOMY - Busi­ness a.m.

SEARS HOLD­INGS CORP CHAIR MAN Ed­die Lam­pert sub­mit­ted a re­vised takeover bid of more than $5 bil­lion for the com­pany, ac­cord­ing to a reg­u­la­tory fil­ing made on Thurs­day, sig­nif­i­cantly in­creas­ing the like­li­hood the U.S. depart­ment store will be able to stay in busi­ness.

Sears set a Wed­nes­day dead­line for Lam­pert to sub­mit a new of­fer for the re­tailer and a $120 mil­lion de­posit, after the bil­lion­aire hedge fund man­ager’s ear­lier $4.4 bil­lion bid fell short. The chain, which in­cludes Kmart dis­count stores, had de­cided to ask a U.S. bank­ruptcy judge to pur­sue liq­ui­da­tion Tues­day morn­ing, be­fore giv­ing Lam­pert more time to im­prove his of­fer.

His new bid, made through an af­fil­i­ate of his hedge fund ESL In­vest­ments Inc, as­sumes more than $600 mil­lion in li­a­bil­i­ties, in­clud­ing taxes, ven­dor bills and other ex­penses Sears has in­curred since fil­ing for bank­ruptcy pro­tec­tion last Oc­to­ber.

“We be­lieve our pro­posal will pro­vide sub­stan­tially more value to stake­hold­ers than any other op­tion, in par­tic­u­lar a liq­ui­da­tion, and is the best path for­ward for Sears, its as­so­ciates and the many com­mu­ni­ties across the United States touched by Sears and Kmart stores,” a spokesper­son for ESL said in a pre­pared state­ment.

Sears will con­sider Lam­pert’s of­fer against a pos­si­ble liq­ui­da­tion dur­ing a Jan. 14 bank­ruptcy auc­tion.

The bid will pre­serve up to 50,000 jobs. Sears em­ployed about 68,000 peo­ple when it filed for bank­ruptcy.

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. They also say that su­ing Lam­pert over past deals he has done with the com­pany will help boost how much they re­coup.

Lam­pert, how­ever, has re­quested as part of his new bid that he would no longer have to face those law­suits. For that right, a so-called “le­gal re­lease,” Lam­pert is of­fer­ing $35 mil­lion cash, ac­cord­ing to the fil­ing.

The new of­fer takes on roughly $166 mil­lion in pay­ment obli­ga­tions to ven­dors and $43 mil­lion in ad­di­tional sev­er­ance costs. The hedge fund will also as­sume $135 mil­lion in tax bills for prop­er­ties that Lam­pert hopes to ac­quire as part of his bid.

To fi­nance the new of­fer, ESL has re­ceived debt com­mit­ment let­ters from lenders for a new as­set-backed 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.

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