Sears might have just found its savior — in the form of its very own chairman, Eddie Lampert.
The billionaire executive has placed a $4.6 billion bid through his hedge fund, ESL Investments Inc., in a last-ditch effort to salvage what’s left of the once-dominant retailer, which filed for bankruptcy on Oct. 15.
In a regulatory filing addressed to Sears debtors’ investment banker, Lazard Frères & Co., Lampert shared plans to purchase the struggling company with an offer that includes up to $950 million in cash, a credit bid of about $1.8 billion and the assumption of an estimated $1.1 billion in liabilities. The acquisition, which would be completed through a newly formed entity called Newco, would consist of other funds such as the rollover of cash collateral as well as a combination of cash and notes.
“Sears is an iconic fixture in American retail, and we continue to believe in the company’s immense potential to evolve and operate profitably as a going concern with a new capitalization and organizational structure,” the letter read. “We believe that our strategy will enable Sears to prosper in an integrated consumer and retail landscape and view a going concern transaction as essential to providing optimal value to creditors and shareholders.”
Over the last several years, ESL has loaned Sears more than $2.4 billion in financing. If approved, the latest investment would be able to save 50,000 out of the company’s 68,000 jobs and reinstate the severance program. Dozens of Sears employees wrote a letter addressed Lampert and other creditors, demanding that the company pay those benefits and keep its roughly 500 stores in operation as it continues Chapter 11 proceedings.
With the hearing set for Dec. 20, Sears hasn’t ruled out offers from liquidators, which would effectively shut down its business and lead to even more layoffs.
“ESL believes that a future for Sears as a going concern is the only way to preserve tens of thousands of jobs and bring continued economic benefits to the many communities across the United States that are touched by Sears and Kmart stores,” added the letter. “We are prepared to move as quickly as possible to complete customary due diligence for a transaction of this nature and enter into definitive agreements, as an expedited process is in the best interest of all parties involved.”
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