(Reuters) – Sears Holdings Corp. SHLD.O ) Chairman Eddie Lampert is in discussions with at least one potential partner to contribute a $ 300 million bank loan as US retailer seeks people familiar with the matter said on sunday
PHOTO PHOTO: A Sears Shop at Fair Oaks Mall in Fairfax, Virginia, January 7, 201[ads1]0. REUTERS / Larry Downing / File Photo
Lampert's hedge fund, ESL Investments Inc., has had discussions with Cyrus Capital Partners LP, an investment company that has some of Sears's existing debt, to share the burden of financing part of the $ 300 million loan that would be separated from another $ 300 million bank loan as Sears & # 39 ; banks have offered to give, said the sources.
The sources requested not to be identified because the overlays are confidential. A sears spokesman did not respond to a request for comment on Sunday.
Sears survival will depend on the will of creditors and suppliers to keep the company floating. Strong sales at the turn of the year will be central to determining the pressure on the warehouse operator to ensure sufficient funding to remain operational.
Through its hedge fund, Lampert has invested billions of dollars in Sears since he created it in its current form in 2005 through a merger with Peer Kmart. As a result, he is the warehouse's largest shareholder and creditor.
Bank Bankruptcy Loan, including Bank of America Corp. BAC.N ), Wells Fargo & Co. ( WFC.N ) and Citigroup Inc ( CN ) , first falls in line for repayment in Sears bankruptcy case, while $ 300 million loan as Sears seeking from lenders including ESL would be refunded afterwards.
Someone who represents Sears while bankrupt has also suggested Lampert that he should seek to replace $ 300 million loan from the banks with own funding, says some of the sources. This would mean that Lampert could potentially contribute to bank loans totaling $ 600 million, said the sources.
Such a move will potentially consolidate Sears' obligations during bankruptcy negotiations, giving Lampert more control over the company's lawsuit, since he would essentially be the most important so-called debt securities lender, said the sources. As it stands now, Sears considers having two such loans.
However, it is not clear whether Lampert can or is willing to provide funding to repay banks lending Sears money bankrupt, the sources said. Lampert could destroy the idea and remain focused on contributing to the $ 300 million loan. Sears wants it to be subject to repayment to banks, said the sources.
The sources announced that negotiations between Sears, Lampert and other potential sources of bankruptcy remain liquid and can not lead to an agreement. Sears filed for bankruptcy protection in White Plains, New York on October 15, with a plan to close about 142 of its 700 stores at the turn of the year and sell up to 400 of their best-selling stores in an auction in January to a buyer who will hold them in operation.
Lampert resigned as Sears CEO after bankruptcy delivery, and plans to bid on outlets.
Sears, which has nearly 70,000 employees, has not won any profit since 2011. It is struggling with competition from e-commerce companies like Amazon.com Inc. ( AMZN.O ) as well as brick-and- mortar dealers like Walmart Inc ( WMT.N ).
The company recorded $ 6.9 billion in assets and $ 11.3 billion in debt filed in US bankruptcy court in the Southern District of New York. A court hearing that concludes bankruptcy funding for Sears is expected during the week of 29 October.
Reporting by Mike Spector and Jessica DiNapoli in New York; editing by Greg Roumeliotis and Grant McCool