Edward Lampert’s ESL Investments Inc. unveiled an offer to save a chunk ofSears Holdings Corp.’s SHLDQ -2.24% stores on Friday, but the retailer’s survival isn’t guaranteed.
Discussions about financing remain fluid, people familiar with the matter said. Other offers came from liquidation firms, other people familiar with the matter added.
An ESL spokesman said in a statement Friday that through an affiliate, Transform Holdco LLC, the firm submitted an offer for roughly 425 Sears stores, for a total value of $4.4 billion.
The offer is slightly lower and for fewer stores than ESL’s original bid earlier in December. ESL is a hedge fund run by Mr. Lampert, Sears’s chairman and former chief executive.
The bid includes a $1.3 billion financing commitment from three financial institutions, ESL said. The banks that agreed to extend the maturity on a $1 billion loan to beyond Sears’s bankruptcy include Bank of America Corp. andCitigroup Inc., people familiar with the matter said. ESL’s current bid also calls for ESL to forgive or extend maturities on most of Sears’s debt, according to one of the people.
By Jan. 4, Sears’s advisers will evaluate whether ESL and other bids are deemed qualified to proceed to an auction scheduled for mid-January.
As part of the financing package, ESL and Cyrus Capital Partners LP are giving Sears a new loan of over $200 million backed by some Sears properties, one of the people said.
Liquidation firms Tiger Capital Group LLC and Great American Group LLC teamed up to place a liquidation bid, with the option of joining with other liquidation firms, people familiar with the matter said. Meanwhile, Gordon Brothers Retail Partners LLC and Hilco Global Merchant Resources LLC joined forces in another bid, the people said.
All four liquidation firms had teamed up to liquidate all Toys “R” Us Inc. stores in the U.S. earlier this year, and took part in the liquidation of Sears Canada.
Earlier in December, bids of interest were due for Sears. At the time, ESL made an indicative offer, as did the liquidator groups.
During a Dec. 18 hearing, the Sears attorney said multiple bids had already been received, including offers from liquidation firms to close some or all of the stores, as well as bids for specific divisions or assets, rather than the chain as a whole.
The early December offer from ESL had included the forgiveness of $1.8 billion of debt and $1.1 billion of assumed liabilities it is owed by Sears. ESL is Sears’s largest shareholder and creditor.
The bid received criticism from some of Sears’s unsecured creditors, which took issue not only with the so-called credit bid, but also with the provision that releases Mr. Lampert, his firm and others from future lawsuits related to their oversight of Sears before the bankruptcy filing.
When Sears sought bankruptcy protection in October, the retailer operated 687 Sears and Kmart stores.
Sears had identified 142 stores it would close immediately and another 40 to be shuttered later. A Sears attorney said during a recent hearing the retailer would seek approval to close another small group of stores.
Since the start of Sears’s bankruptcy process, Mr. Lampert’s ESL had said publicly it would submit an offer to keep the beleaguered chain alive.
Securities and Exchange Commission rules require that ESL’s offers must be made public due to Mr. Lampert’s ties to the company.
As part of the bankruptcy filing, Mr. Lampert stepped down from his role as CEO but remains chairman of Sears. Mr. Lampert put Sears and Kmart together in 2004, following the Kmart bankruptcy filing. At its peak, there were more than 2,300 Sears and Kmart locations.
