Sears Chairman Eddie Lampert has offered to buy the struggling stores and assets in order to keep the company alive. Yes, the billionaire investor—who happens to also be the former CEO of Sears—would like to buy up whatever is left of the now-bankrupt retailer.
In a regulatory filing on Thursday, Lampert will use his hedge fund, ESL Investments, to offer $4.6 billion in cash and stocks to buy what remains of the entire company. This, he says, will save upwards of 5,000 jobs.
In a statement, Lampert comments that “Sears is an iconic fixture in American retail,” noting that he believes the company still has great potential to evolve from this point and operate with a profitability mindset supported by new capitalization and a new organizational structure. Furthermore, Lampert commends that the major concern, right now, is to preserve jobs, which trickles down to continued economic benefits to communities nationwide.
You may recall that Lampert was the CEO when Sears originally filed for bankruptcy in October. Following this filing, the company is now heading into complete liquidation: the selling off of assets in order to generate cash. Sears, of course, was once an iconic stalwart in American retail, but they have been quickly closing stores and laying off employees; only about 500 stores remain today.
United States Federal Bankruptcy Court Judge Robert Drain is hearing the bankruptcy case. Lampert would need his approval of the plan before ESL could finalize the purchase of Sears. While the gesture to save jobs seems noble, though, a broad committee of Sears creditors has argued, in court, that the company would actually do better by closing the rest of the stores and liquidating the rest of the assets. This, they say, would return the highest monetary value to the lenders.
On the other hand, Lampert has offered to front some of the cash that would be necessary to finalize this deal. Basically, his proposal includes $950 in cash from loans that Sears could borrow from more lenders. ESL, then, would take equity stakes in Sears in return for the company forgiving $1.8 billion in secured debt. Lampert argues that this debt is anchored by hard assets (ie, real estate) and proposes ESL should assume $1.1 billion in liabilities (which could include extended product warranties and gift cards and points accrued through the loyalty shopping program).