A 125-year-old retail icon reportedly may have only one more day to live.
Bankrupt U.S. retailer Sears Holdings Corp.'s last shot at survival is a $4.6 billion offer by Chairman Eddie Lampert to buy the struggling company out of bankruptcy through his ESL Investments hedge fund, CNBC reported.
ESL is the only party offering to buy Sears as a whole, people familiar with the situation told CNBC. “Without that bid or another like it, liquidators will break the company up into pieces,” CNBC reported.
As of Thursday afternoon, Lampert had neither submitted his bid, nor rounded up financing, ahead of Friday’s deadline, CNBC reported.
Lampert’s offer calls for about 500 Sears stores to remain open and would keep 50,000 of the retailer’s workers employed, according to a letter from his hedge fund filed with the Securities and Exchange Commission earlier this month, Reuters explained.
The 125-year-old company has faced a series of deadlines this month to find a buyer that would keep it in business as some of its creditors call for it to shut down, claiming they would be repaid more through going-out-of-business sales.
If Lampert submits a bid, Sears’ advisers would have until Jan. 4 to decide whether he is a “qualified bidder.”
“Only then, could ESL take part in an auction against liquidation bids on Jan. 14,” CNBC said.
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.
ESL’s takeover bid features financing from a variety of sources and a complicated structure not uncommon in bankruptcy auctions. For starters, the hedge fund proposes to raise up to $1.7 billion in cash through a series of maneuvers that include Sears seeking a new loan backed by collateral and issuing new notes.
The hedge fund, the retailer’s largest shareholder and creditor, would also forgive $1.8 billion Sears owes it in exchange for the company’s assets, a bankruptcy maneuver known as credit bidding. Finally, ESL would assume $1.1 billion in existing Sears liabilities, such as gift cards the department-store chain issued.
Lampert’s hedge fund has been working on a bid for Sears since the company filed for bankruptcy in October. The hedge fund manager was the chief executive of Sears until it filed for bankruptcy.
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 U.S. appliance repair provider, the letter said.
The retailer is attracting interest from outsiders, and Sears’ attorneys have said they will analyze bids to maximize value. Retailer Ace Hardware Corp. and investment firm Centerbridge Partners LP were together eyeing an offer for Sears’ home services division, Reuters reported.
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.
Sears clinched a $350 million loan from creditor Cyrus Capital Partners LP in November to help it stay in business through the holidays.