ESL Investments Inc has offered Sears Holdings Corp $4.6 billion for purchasing the bankrupt U.S. retailer. ESL Investment is owned by Eddie Lampert, the chairman of Sears Holdings Corp.
The offer is one of the options that would prevent the shutting down of Sears. Lampert’s offer says that around 500 Sears store will remain open employing 50,000 workers, as reported by a letter from his hedge fund that was filed on Thursday with the Securities and Exchange Commission.
The company has a lot of deadlines in this month for finding a suitable buyer to stay in business as the creditors are after its shut down so that they can get back their money by going out of business sales.
As per the court papers, the preliminary indications of Sears assets’ interest were due on Wednesday. Many retailers have liquidated in previous years including Bon-Ton Stores Inc and Toys R Us Inc when they filed for bankruptcy as there were no viable offers to keep the company going.
The features of ESL’s takeover offer include a lot of sources and a complicated structure which is common when it comes to bankruptcy auctions. The hedge fund has proposed to raise around $1.7 billion cash by a series of maneuvers which includes Sears plans of seeking new loan backed by collateral and issuing new notes.
The hedge fund will further forgive $1.8 billion that Sears owes in exchange for the assets of the company. This is a bankruptcy maneuver called credit bidding. ESL is also ready to assume $1.1 billion in the existing liabilities of Sears like the gift cards that are issued by the department store chain.
Lampert has been preparing for it since Sears filed for bankruptcy back in October. The bid also proposes to acquire Sears Auto Centers, battery line DieHard, the home service divisions of the retailer and appliance brand Kenmore.
Source: Reuters and Wall Street Review
