You are here
US$5.3b deal said to allow Sears chief to keep stores open
SEARS lives. For now.
The bankrupt retailer and its chairman, Edward S. Lampert, have reached a US$5.3 billion deal that would keep its 425 stores open and its 50,000 employees at work, according to a person familiar with the situation. Under the deal, reached early on Wednesday, Mr Lampert would acquire most of Sears' assets, the person said. The final details of the sale still needed to be arranged, and negotiations continued through the day.
Mr Lampert, a hedge fund manager, was the only bidder at a closed-door auction this week who sought to keep the company operating,
All of the competing bidders planned to liquidate the company's real estate, inventory and brands.
A federal bankruptcy judge must still approve Mr Lampert's bid, giving the company's creditors a chance to derail the deal.
At a hearing last week, the bankruptcy judge, Robert D. Drain, said Mr Lampert's bid was "a good development" because it offered Sears a shot at survival.
If the deal was approved, Sears would emerge from bankruptcy with less debt but would still face steep odds in winning back shoppers.
Mr Lampert is deepening his investment in Sears at a time of great uncertainty for old-line retailers.
While overall consumer spending has been solid, some retailers like J C Penney and Macy's reported weak holiday sales, signalling that their turnaround plans are floundering as Americans change the way they shop.
Founded shortly after the Civil War, Sears was once the nation's largest retailer. But it has been in a precipitous decline for years, losing ground to Amazon and Walmart as consumers moved their spending online and mall-based chains suffered.
It is unclear how Mr Lampert plans to turn Sears around. The company filed for bankruptcy in October, as its sales stalled and its debt payments mounted.
Mr Lampert, who took control of Sears in 2005 when it merged with Kmart, was the company's largest shareholder and lender through his hedge fund, ESL Investments.
Some creditors have criticised Mr Lampert for making deals, including selling some of the company's most valuable real estate and the Lands' End brand, that have benefitted his hedge fund while harming Sears in the long run.
Mr Lampert has countered those arguments by saying in interviews that his investments in Sears have hurt him financially.
Even without Mr Lampert's financial engineering, analysts acknowledge that Sears would still probably struggle to compete against more innovative retailers with greater resources. NYTIMES