Tuesday, 25 June, 2019


U.S. retail giant Sears considers takeover bid after liquidation threat

Sears to ask bankruptcy judge to liquidate Modal Trigger Getty Images
Conrad Doyle | 09 January, 2019, 16:13

Former Sears CEO Eddie Lampert, through a hedge fund he controls, attempted to rescue the venerable retailer, bidding $4.4 billion for the firm, which declared bankruptcy in October.

That bid had included $1.3bn (£1bn) in financing from three institutions, ESL said in a statement.

Lampert's bid proposed forgiving US$1.3 billion of debt he holds in exchange for ownership of the reconstituted Sears, a bankruptcy manoeuvre known as a credit bid.

Sears Holdings Corp shares surged on the news, rising to a daily high of $0.365 in the over-the-counter markets as of the time of writing.

After years wasting away on life support, Sears' doctors were Sears Holdings had planned to reject Lampert's bid to save the 126-year-old company, which would have put it on a course to liquidation....

By deeming Lampert's revised bid acceptable, Sears started the clock on an auction period that ends on January 14.

Lampert submitted a bid on December 28 and Sears had until Friday to accept it, but the company didn't comment before Tuesday's hearing.

Sears has not said how many other offers it received or whether any others would let the retailer avoid liquidation. It is still possible that those wishing to shutdown the company will bid more for the assets than Lampert is offering.

Judge Robert Drain still needs to approve the agreement, but called the deal "a good development". That raised concerns in the negotiations since the maneuver might not be allowed in court, the sources said, given ongoing investigations of Lampert's pre-bankruptcy deals, which the hedge fund manager maintains were proper.

The creditors have argued that forgiveness of his debt should not be accepted as part of the bid, because Lampert loaned Sears the money when he was CEO. Those creditors, which include Sears landlords and bondholders, have also questioned Lampert's pre-bankruptcy transactions with the retailer. "Tools we buy from here", said Bhardi Patel, a Sears shopper. Merchandise from toys, medicine, gramophones, automobiles, kit houses and tombstones made it the Amazon of its time. Even as Sears' brick and mortar competitors established effective e-commerce operations Sears - a pioneer in catalog sales - failed to do so.

Lampert had pledged to restore Sears to its glory days, when it owned the tallest building in the world as well as a radio station and Allstate insurance. The retailer plans to announce its liquidation Tuesday morning, the sources added.

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