Lampert hints at potential deal for Sears

Shares of Sears Holdings gyrated Tuesday after the hedge fund controlled by Sears’ CEO Edward Lampert said it had received “numerous” inquiries from potential partners.

Sears Holdings, which has both the Sears and Kmart department store chains, saw its stock rise nearly 2.3% in pre-market trading after the announcement. But the price eventually fell later in the day and the stock closed down 1.4% at $3.44 a share.

Lampert’s ESL Investments asked a special committee of the company’s board of directors for permission to “engage with” potential partners “to allow us to put forward a definitive proposal that will result in the most benefit to Sears.”

ESL has been the proposed buyer of some of the embattled retailer’s assets. The special committee previously placed limits on ESL working with partners as the hedge fund explores the potential purchase of Sears’ real estate, Kenmore brand and other assets.

The proposed Sears assets acquisition is unusual because Lampert not only is Sears Holdings’ top executive but is also the iconic company’s largest investor. Simultaneously, Lampert serves as chairman and CEO of ESL, a hedge fund that largely focuses on real estate.

ESL told the committee in a letter filed with the Securities and Exchange Commission on Tuesday that “finding an appropriate partner soon will be a critical factor that will materially impact any definitive proposal that we are able to make.”

Sears has experienced a “significant increase” in the market price of its unsecured debt during the month since ESL proposed acquiring some of the company’s assets, the letter said.

The increase could make the ESL-proposed debt for equity and debt repurchases “less attractive and more difficult” to execute as well as reduce the impact of a planned recapitalization of Sears, the letter said.