Report: Sears chairman submits new US$5bil bid to save retailer

Another reprieve: A person walks near a sign for a Sears store in Hackensack, New Jersey. Sears is getting another reprieve from liquidation after its chairman and largest shareholder revised his bid to save the iconic brand. — AP

NEW YORK: Sears Holdings Corp chairman Eddie Lampert submitted a revised roughly US$5bil takeover bid for the company on Wednesday, people familiar with the matter said, boosting the chances that the US department store operator will escape liquidation.

In a concession, Lampert agreed to assume tax and vendor bills Sears has incurred since filing for bankruptcy protection in October, the sources said. The billionaire’s revised bid was submitted through an affiliate of his hedge fund, ESL Investments Inc, on Wednesday afternoon along with a US$120mil deposit, the sources added.

Lampert’s previous bid, which Sears had rejected, was valued at US$4.4bil.

The new bid, which Sears will consider during a Jan 14 bankruptcy auction, proposes assuming up to about US$300mil of tax and merchandise expenses the 126-year-old company has racked up since its Oct 15 bankruptcy filing, the sources said.

The offer, which aims to preserve up to 50,000 jobs, also would assume up to roughly US$350mil in additional Sears bankruptcy expenses, severance benefits for employees and other liabilities, one of the sources added.

Sears employed about 68,000 people when it filed for bankruptcy.

Ensuring Sears can pay its expenses, which include bills for legal and financial advisers and are known as administrative claims, was a main point of contention as the company negotiated the deal with Lampert.

Lampert’s previous bid had proposed acquiring 425 Sears stores.

The sources asked not to be identified because the details of Lampert’s new bid are not yet public.

Sears and ESL declined to comment.

Lampert’s revised bid is the only one that envisions keeping Sears alive, albeit in a smaller form, and came after a last-minute deal he reached with the retailer on Tuesday as the company was preparing to liquidate.

Other offers submitted over the past several weeks were for pieces of Sears or liquidation proposals to close its doors.

The breakthrough occurred hours before a scheduled bankruptcy court hearing on Tuesday. A Sears lawyer disclosed the agreement during the hearing, telling a judge it materialized after what he described as round-the-clock negotiations.

The agreement required Lampert to make a US$120mil deposit, more than US$17mil of which he will forfeit to Sears creditors unless his bid prevails in next week’s bankruptcy auction.

Sears will now weigh Lampert’s offer against a liquidation that would shut down the retail chain for good and put tens of thousands of people out of work. Sears has lined up a liquidator to sell off the chain’s vast inventories of tools, appliances and store fixtures if necessary.

Sears dates back to the late 1800s and eventually became known for its mail-order catalogues.

By the 1960s, it was the largest retailer in the world and a fixture in malls across the United States, selling everything from appliances to auto parts to toys.

But the retailer failed to adapt to the modern era of online shopping and was overtaken by the likes of Inc , which earlier this week became the world’s most valuable company with a market capitalisation of close to US$800bil. Sears in October became the latest retailer to be swept up in a wave of bankruptcies amid the modern competitive landscape and is now trying to avoid the fate of other chains that failed to survive their court filings. — Reuters


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