Sears chairman Lampert secures salvage finance
Eddie Lampert's ESL Investments will finance its winning $5.2bn (€4.5bn) bid to salvage Sears Holdings in part with $850m from a new asset-based loan, according to a regulatory filing last Friday.
The deal will also be financed by ESL's forgiving $1.3bn of Sears debt that it holds, and with $621m of existing senior debt that's being rolled over to the post-bankruptcy company, the filing said. The new Sears will assume another $592m of other liabilities tied to Sears entities. Bank of America, Citigroup and Royal Bank of Canada have committed financing for the asset-based loan. Lampert is also receiving real estate mortgage financing from hedge fund Cyrus Capital Partners, which has extensive ties to Sears.
The deal can be terminated if it hasn't been approved in bankruptcy court by February 8 or if the transaction hasn't closed by February 19.
Sears will additionally assume up to $166m of payment obligations for inventory ordered before the deal closes and $139m of 503(b)9 claims, a type of payment owed to vendors and suppliers.
The bid will save 45,000 jobs and pay $43m toward severance costs. Sears employed 68,000 when it went bankrupt in October. ESL will also pay $35m to be released from some legal liabilities.