Former CEO Lampert Bids $4.6 Billion for Sears

Paul Ausick

In a Thursday filing with the U.S. Securities and Exchange Commission, former Sears Holdings Corp. 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.

Newco’s bid totals approximately $4.6 billion, comprising $950 million in cash, a credit bid of about $1.8 billion, $500 million in cash and Newco notes and equity, and approximately $271 million in additional cash collateral, as well as approximately $1.1 billion in assumed liabilities.

There also may be some good news in the offer for some Sears employees:

Newco expects to provide offers of ongoing employment to approximately 50,000 employees of Holdings and to reinstate Holdings’ prepetition severance program for the benefit of all eligible employees at the close.

The so-called indicative bid is nonbinding and the components of the bid may change. The bid was made in response to a November 21 filing with the bankruptcy court on behalf of the debtors.

The purchased assets would include approximately 500 stores and related real estate interests (including headquarters and distribution locations), inventory, infrastructure and material related contracts along with Sears Auto Centers, Shop Your Way, Kenmore, DieHard, Monark, Innovel, Sears Home Services and material related contracts. These assets also include approximately $1.8 billion of retail inventory and credit card and pharmacy receivables.

The offer was transmitted to Lazard Frères on Wednesday in a letter signed by Lampert that included the following comments:

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. Our proposed business plan envisages significant strategic initiatives and investments in a right-sized network of large format and small retail stores, digital assets and interdependent operating businesses.

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.

Sears must find a buyer by December 15 in order to remain in business, according to Reuters. Lampert stepped down as Sears CEO following the October 15 bankruptcy filing. He remains the company’s board chair.