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Sears, lenders are approaching a major bankruptcy agreement without Lampert



Sears Holdings
Corp.

packing up an extended bankruptcy financing package that will keep it floating past the holiday as it appears to sell its most profitable stores and other assets.

At the time of the dealer's October 15 bankruptcy filing, a group of banks comprised of Bank of America NA, Wells Fargo & Co., and Citibank NA agreed to contribute $ 300 million in funding. Chairman and former CEO Edward Lampert, through its hedge fund ESL Investments, was negotiating with other lenders to provide another $ 300 million junior loan.

Now the structure has changed. Mr. Lampert's ESL is no longer expected to participate in funding, according to people familiar with the situation. The junior lenders consisting of hedge funds and private equity companies, including Cyrus Capital Partners LP, will provide $ 450 million and banks will cut their position to $ 1

50 million, bringing the new totals to $ 600 million, according to the people. [19659002] Previous legal papers show Cyrus was already in discussions about the bankruptcy loan at the time of Chapter 11 filing.

While the company and lenders conclude an agreement, the discussions are floating and can be changed by the end of this week, the people said.

Herr. Lampert is now focused on putting together a so-called stalking horse bud for as many as 500 Sears stores and other assets, including the Kenmore brand, said one of the people. The proposal, which will be subject to higher and better offers, will probably consist of cash and forgiveness of some of the $ 2.6 billion in debt that ESL has, says the person.

Sears has stated in court that around 400 profitable stores will be the center of the sales process, but other assets may be part of the sale.

Before Sears bankruptcy filing, The Wall Street Journal reported that banks' lenders took a more difficult attitude and were only willing to provide bankruptcy funding that would allow Sears to sell inventory and close all its stores. There have also been further discussions with the banks about future closures, said two of the people.

Sears closes 142 unprofitable stores near the end of the year, as well as 46 stores expected to close by the end of November. Currently, the company operates 687 Sears and Kmart stores. It employs about 68,000 people.

During a recent court hearing, a Sears lawyer said the company's advisors were negotiating the funding and were still looking for potential lenders to take part in the loan. In addition, the lawyer claimed that different funding structures were assessed.

A consultation on financing approval is scheduled for November 15th. During the same consultation, Sears will seek approval to proceed with a sales timeline that will see an auction taking place in January.

The sale must be completed no later than February 8th to comply with the sales timetable introduced by some of the bank's lenders, court paper exhibition.

Reuters reported earlier about the new funding package.

Write to Lillian Rizzo at Lillian.Rizzo@wsj.com and Suzanne Kapner at Suzanne.Kapner@wsj.com


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