Bank Of America, Citi Back Lampert To Save Sears

ESL Investments Secures Financing to Save Sears

ESL Investments has found backing for its $5.2 billion bid to save Sears Holdings Corp.

Last week, Eddie Lampert won a bankruptcy court auction for the retailer, beating out a bid from Abacus Advisory Group LLC that would have closed the retailer’s locations as well as sold its inventory. Lampert’s plan, however, will reportedly keep approximately 400 locations in operation.

Bloomberg reported that a regulatory filing revealed that $850 million will come from a new asset-based loan, with Bank of America, Citigroup and Royal Bank of Canada providing the financing.

In addition, ESL will forgive $1.3 billion of Sears debt, while $621 million of existing debt will be rolled over to the post-bankruptcy company. The new Sears will then take over an additional $592 million of liabilities tied to the company's entities. Lampert is also receiving real estate mortgage financing from Cyrus Capital Partners.

Sears will also assume up to $166 million of payment obligations for inventory ordered before the deal closes and $139 million of 503(b)9 claims.

The deal, which can be terminated if it hasn’t been approved in bankruptcy court by Feb. 8 or if the transaction hasn’t been completed by Feb. 19, will save 45,000 jobs and pay $43 million for severance costs. ESL will also pay $35 million to be released from certain legal liabilities, but that won't cover claims related to Lands’ End, Seritage Growth Properties or Sears Canada.

Sears – which hasn’t turned a profit since 2010 – was looking like it was going to have to liquidate after initially turning down Lampert's first offer. The retailer, which started in the 1880s as a mail order catalog and was once the biggest department store chain in the country, has failed to compete in recent years with online and offline competitors, and also suffered as a result of the 2008 financial crisis. Sears had 68,000 workers and 687 locations at the time of its Chapter 11 bankruptcy filing in October.



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