Sears Agrees to Consider Revised Takeover Bid

Sears Agrees to Consider Revised Takeover Bid

Sears Agrees to Consider Revised Takeover Bid

Sears will assess a new $5 billion bid from Chairman Eddie Lampert against liquidators on January 14 at a bankruptcy auction.

The hedge fund then had a court-ordered deadline on Wednesday to improve its offer and come up with $120 million to participate in an auction on Monday. The chain, which includes Kmart discount stores, had made a decision to ask a US bankruptcy judge to pursue liquidation Tuesday morning, before giving Lampert more time to improve his offer.

It included $1.3 billion in financing and was for 425 Sears and Kmart stores, about half the number of stores Sears had when it filed for bankruptcy this fall.

Last week, Lampert submitted a $4.4 billion bid to save a portion of Sears Holdings Corp. via Transform Holdco LLC, an affiliate of his private equity firm, ESL Investments Inc.

"By including severance payment, Lampert's bid proves that retail employees' organizing to fight for job security, severance and financial support is having a major impact on the bankruptcy process", said United for Respect's Rise Up Retail in statement. The bid will be accessed against liquidation offers to determine where the most value for the company stands.

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Some creditors have concluded that they can recover more of their investment if the stores and other assets are auctioned off. US bankruptcy court Judge Robert Drain reminded the Sears lawyers at a hearing this week that the company has an obligation to review all its options, not just the offer from Lampert.

A group of Sears creditors, including some landlords and vendors, has been calling for the chain to shut its doors for good, saying they will recover more money in that scenario. They also say that suing Lampert over past deals he has done with the company will help boost how much they recoup.

If his new bid passes muster with creditors and the court, Lampert can compete in the auction against bidders who would liquidate the company. The offer also includes $35 million in cash, the regulatory filing indicated.

To finance the new offer, ESL has received debt commitment letters from certain lenders related to a new asset-backed loan facility and from funds managed by Cyrus Capital Partners to roll over certain debt facilities and for a new secured real estate loan, the filing showed. The hedge fund will also assume $135 million in tax bills for properties that Lampert hopes to acquire as part of his bid.

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