Sears may be running out of time, CEO warns
Lampert says retailer must sell more assets, restructure debts to survive
Sears Holdings CEO and largest shareholder Eddie Lampert proposed that the retailer sell more assets and restructure its debts to further extend its life.
In a proposal Sunday to Sears that was disclosed Monday morning in a public filing, Lampert’s hedge fund said the retailer “must act immediately to have sufficient runway to continue its transformation.”
The ESL Investments plan insinuates that the end could be near for Sears if it picks another path.
“We continue to believe that it is in the best interests of all stakeholders to accomplish this as a going concern, rather than alternatives that would substantially reduce, if not completely eliminate, value for stakeholders,” ESL said in the proposal.
The hedge fund noted that Sears faces “significant near-term liquidity constraints,” including a $134 million payment due Oct. 15 and reserve requirements on Oct. 1.
Lampert’s proposal would include $3.22 billion in asset sales, including the sale of real estate for $1.47 billion.
Sears said it would carefully consider the proposal. The company already had formed a committee of its board of directors to contemplate Lampert’s previous proposal to acquire Sears’ Kenmore appliances brand. Those negotiations continue.
Sears has been battered by digital competitors, struggles of the department store sector, costly pensions and its own mistakes, including a failure to invest in stores and e-commerce.
Lampert has pulled off a series of financial transactions that have given Sears more runway, despite significant sales declines. He has approved hundreds of store closures and massive cost cuts. But critics say Lampert has put his hedge fund at the front of the line to collect key debt payments and assets in the event of Sears’ demise.