According to multiple reports, liquidating was narrowly avoided by Sears Holdings (SHLDQ) after to buy and save the company was made by Eddie Lampert, company chair, with a last-minute $4.4 billion. SHLDQ was once known for the iconic catalog and department stores that it owned.
According to a report by CNBC, based on sources familiar with the deal, the bid was made by Lampert through his hedge fund, ESL Investments. Similar reports about the deal were published by Reuters and Bloomberg on Friday evening.
There we5re however no comments available from ESL Investments.
A proposal to tentatively buy Sears for $4.6 billion was made by Lampert earlier this month. No other official bid had appeared by Friday.
Lampert was looking to arrange finance financing for the bid to save Sears and for which it was seeking additional time, reported Bloomberg late Friday. On the other hand, the same day, Reuters also reported that a “$950 million asset-based loan” and $350 million in revolving credit would be put up by Bank of America Corp., Citigroup Inc. and Royal Bank of Canada for the offer.
According to the CNBC report, the bid proposal by the chairman meant that ESL Investments would need to purchase 425 Sears stores and would also offer employment to up to 50,000 of current 68,000 employees of the chain.
At the U.S. Bankruptcy Court, bids to acquire the retailer had been due on Friday afternoon. The only bid for the company was Lampert’s previous proposal but that had not been formally filed with the court even as questions about financing and other issues cropped up. January 4 is the deadline for deciding on “qualified” bidders. And an auction would be slated for January 14 if a bid by ESL Investments goes past that deadline hurdle.
It is expected that the liquidators would break the company into pieces is there is no acceptance of the bid from ESL Investments which is also the largest creditor and shareholder of the chain.
The unsecured creditors committee has criticised Lampert’s proposal because it makes Lampert and others immune to future lawsuits related to their oversight of Sears before the bankruptcy filing.
There was little hope for Sears, which acquired Kmart for $11 billion in 2004, that was held out by retail-stocks columnist Jonathan Heller of Real Money, TheStreet’s premium site for active traders.
“I don’t see Sears surviving and believe it will be liquidated,” Heller said. “It’s been one of the longest, slowest deaths of an American icon that we’ve seen; a very slow train wreck. Growing up in the 1970s, the Sears Wish book catalogue was everything — I can still see the GI Joe layouts. The Kmart acquisition may go down as one of the worst ever. It’s sad, but we’ve seen it coming for years — all but a forgone conclusion.”
Other retailers have surpassed Sears which was set up by Richard Warren Sears and Alvah Curtis Roebuck in 1893, Heller said.
“I recently went into our local Sears store, which used to be a mall anchor store,” he said. “It was in the process of being closed, and everything was on sale. It was a sad shell of its former self.
“Unfortunately, there was simply no reason to shop at Sears any longer — has not been in years, in my view,” he said. “Home Depot and Lowe’s took over as leaders in home appliances, which used to be huge for Sears. Land’s End products in the stores was a draw for a while, but that could not save them.”
(Adapted from TheStreet.com)