Edward S. Lampert is ready to help Sears Holdings Corp. lighten its load — and shore up its liquidity.
And his plan might see Sears off-load its Kenmore and Sears Home Services businesses as well as more real estate.
Lampert, a controversial investor who is Sears’ largest shareholder, a significant debt holder and also its chairman and chief executive officer, followed through on his offer from April and submitted nonbinding proposals to buy the Kenmore and the home improvement portion of the firm’s home services unit for $470 million.
The offer was made in a letter Tuesday to a special committee of the company’s board, which was formed to evaluate the proposal.
Lampert also took the opportunity to “reemphasize our firm belief that these transactions should be undertaken together with tender and exchange offers designed to allow Sears to reduce its debt, extend its maturity profile and alleviate its liquidity challenges.
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“Together, we believe these transactions would contribute to a comprehensive solution to create a viable and healthy Sears,” he said.
Lampert engineered Sears Holdings by putting together Sears and Kmart in 2005. And while the investor was seen in some corners as a retail Warren Buffett who would take cash from the stores to fund investments elsewhere, Sears and Kmart floundered and the company has been steadily spinning off assets, including Lands’ End and the 235-store real estate investment trust, Seritage Growth Properties.
But Sears is still running low on cash and now has a market capitalization of just $198 million and total debt of $5.5 billion.
Lampert said in his letter that the Kenmore and home services deals could close within 90 days and that “speed and certainty here are critical.”
Certainly Lampert is on the move.
He said his investment firm, ESL Investments Inc., was also planning to “engage with potential third-party investors to solicit interest in a transaction involving all or portions of Sears’ encumbered real estate (including the assumption of the debt obligations secured by such real estate), with the expectation that such transaction would include an ongoing master lease for some or all of the stores to allow for their continued operation.”
That would add “landlord” to Lampert’s already multihyphenate role at Sears.
“We further encourage Sears to engage with its existing debt holders to gather information about their objectives and expectations to help develop a view of how tender or exchange offers for certain series of Sears’ existing debt could be constructed,” Lampert said. “As a significant holder of Sears’ debt, ESL is prepared to participate in certain such transactions if they would result in a substantial reduction of Sears’ overall leverage.”