Sears Holdings Corp Chairman Eddie Lampert's ESL Investments Inc has made an offer valued at $4.6 billion to buy the bankrupt US retailer, one of the only options that would prevent the department store chain from shutting its doors for good.
Many retailers that have filed for bankruptcy in recent years, including toy seller Toys R Us Inc and department store Bon-Ton Stores Inc, have liquidated after no viable offers to keep the companies open were made.
In a Thursday filing with the U.S. Securities and Exchange Commission, former Sears Holdings Corp. Including the closings after the bankruptcy filing, Sears would have just over 500 functioning locations left.
Lampert's offer also includes swapping $1.8 billion in debt that Sears owes ESL for equity, a maneuver known as a credit bid - which the unsecured creditors have also objected to, according to court documents.
"Sears is an iconic fixture in American retail, and we continue to believe in the company's vast potential to evolve and operate profitably as a going concern with a new capitalization and organizational structure", Lampert said in the letter.
ESL also said the plan would save thousands of jobs, noting that the new company expects to offer ongoing employment to about 50,000 Sears employees. CEO Eddie Lampert's hedge fund, ESL Investments, along with other ownership entities, outlined an "indication of interest" in forming a new entity, "Newco", to bid on "substantially all of the go-forward retail footprint" and other assets and businesses of Sears.
The bid comes days after Sears filed an updated budget with the Bankruptcy Court showing the retailer expected to earn nearly $246 million less during the critical holiday shopping season than it forecast when it declared bankruptcy.
"The longer Lampert stays, the more Sears and Kmart's combined viability is impaired", Flickinger said.
Lampert's ESL Investments already is Sears Holdings' biggest shareholder and creditor.
Others interested in acquiring Sears' assets have until December 28 to submit bids under the timeline approved by the Bankruptcy Court.
ESL's takeover bid features financing from a variety of sources and a complicated structure not uncommon in bankruptcy auctions.