Eddie Lampert, CEO of Sears Holdings, proposes to restructure the struggling retail chain’s debt to avoid bankruptcy.
Lampert’s hedge fund, ESL Investments, is seeking Sears’ board approval to sell off approximately $1.75 billion of assets. This would reduce the retailer’s total debt by nearly 80 percent. The restructuring plan, if approved by the board and creditors, would reduce Sears’ roughly $5.5 billion in debt to approximately $1.24 billion.
Sears would also sell about $1.5 billion of real estate. Some of the stores in such a transaction would be leased back to Sears, according to the documents filed with the Securities and Exchange Commission. Sears operated 866 stores under both its namesake brand and Kmart as of August 2018.
Lampert, who has a controlling ownership stake in Sears, personally owns roughly 31 percent of the retailer’s shares outstanding, while ESL owns about 19 percent.
The Sears board confirmed that it has received the proposal.
The latest push to sell off more assets comes after Sears listed $500 million in second quarter net losses.
ESL offered to buy Kenmore and certain other divisions of the retailer’s business in April.
Sears said it had received ESL’s proposal and directed the company’s management and advisers to work with the hedge fund. A board committee already negotiating with ESL on the proposal to buy Kenmore will review the proposed real estate deal.
