Peter Kaufman Cited in Bloomberg, “Lampert Is Said to Improve Bid to Rescue Sears From Shutdown”

Lampert Is Said to Improve Bid to Rescue Sears From Shutdown
By Katherine Doherty and Josh Saul

January 9, 2019, 8:51 AM PST Updated on January 9, 2019, 5:15 PM PST

Offer for about $5 billion would also pay severance, vendors
Hedge fund seeks standing to compete against liquidators

Sears Files for Bankruptcy After 134 Years in Business

Eddie Lampert’s ESL Investments hedge fund raised its bid to keep Sears Holdings Corp. in business with an offer of about $5 billion that covers severance for workers and bills from its suppliers.

Advisers for the hedge fund crafted a bid that commits ESL to cover more than $40 million of existing severance costs, and more for workers hired in a reorganized Sears, said a person with knowledge of the matter. Lampert is adding $120 million that a bankruptcy court said he needed to post in advance to qualify for an auction set for next week, said the person, who wasn’t authorized to comment publicly. ESL would pick up tax and supplier bills that Sears incurred during bankruptcy proceedings, the person said.

Representatives for Sears Holdings, based in Hoffman Estates, Illinois, declined earlier in the day to comment. A representative for ESL referred to its previous comments, which said the proposal “provides substantially more value to stakeholders than would be the case in liquidation and is the only option to save an iconic American retailer and up to 50,000 jobs.”

Kmart Merger

Lampert, who engineered the acquisition of Sears by Kmart in 2005, held about $2.5 billion in Sears debt as of September, the result of multiple attempts to keep the chain afloat. It shuttered hundreds of money-losing stores, cut more than $1 billion in annual expenses, and spun off units such as Lands’ End Inc.

The original bid didn’t have sufficient upside for other creditors who are being asked to drop pending lawsuits against Lampert and ESL that challenge the validity of some of his prior rescue deals, according to Peter Kaufman, president of investment bank Gordian Group, which isn’t involved in the Sears case.

“Lampert has to beat the creditors’ view that a combination of liquidation recovery from the assets plus litigation claims against him” isn’t worth more than his plan to keep it as a going concern, Kaufman said. “ESL needs to make their deal more attractive than not, if he wants the creditors to play along.”

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