Published: Sat, December 08, 2018
Finance | By Loren Pratt

ESL Plans $4.6 Billion Bid for Sears Holdings

ESL Plans $4.6 Billion Bid for Sears Holdings

In his bid, ESL also proposes to acquire Sears Auto Centers, appliance brand Kenmore, battery line DieHard and the retailer's home services division, the largest US appliance fix provider, the letter said. It then said it would shutter 142 unprofitable stores in the hopes that it could stay in business.

ESL made its intent known in a regulatory filing with the Securities and Exchange Commission.

Both the unsecured creditors' committee and a special committee of the board are investigating those deals that occurred before Sears filed for bankruptcy protection on October 15. Prior to that, the company had closed or announced plans to close hundreds of stores.

Firms that specialize in going-out-of-business sales, so-called liquidators, were also expected to make preliminary offers to shut Sears down, according to sources familiar with the matter. The offer includes $950 million in cash through an asset-based loan facility and a "credit bid" of $1.8 billion.

"Sears is an iconic fixture in American retail, and we continue to believe in the company's huge potential to evolve and operate profitably as a going concern with a new capitalization and organizational structure", Lampert said in the letter. The fund said it expects to continue employing about 50,000 Sears workers and reinstate a severance program in place before the company sought bankruptcy protection.

The company's long-suffering creditors, who have said in court filings that they want the company to liquidate instead of reorganize, will likely object to Lampert's bid, which could also be challenged by a group of liquidators who are preparing a competing bid to close down the chain. 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. Both Sears and the creditors committee are looking into transactions between ESL and the retailer, including loans the hedge fund said amount to $2.4 billion over the past several years. In 2004, Kmart said it would acquire Sears for $11 billion, with the idea being that somehow the two embattled retailers would be better off together than apart.

Others interested in acquiring Sears' assets have until December 28 to submit bids under the timeline approved by the Bankruptcy Court. Further bids would trigger an auction in January.

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