Hedge fund pushes for Sears to divest some businesses

Hedge fund pushes for Sears to divest some businesses

Sears Holdings CEO Eddie Lampert offered to buy some of the Sears units after the company wasn't able to find other buyers, the Wall Street Journal reports.

"Eddie is walking away with the good pieces, and leaving the doomed retail stores behind", notes University of MI business professor Erik Gordon.

ESL's bid for certain real estate owned by the company including the assumption of designated debt obligations secured by that real estate with the expectation of entering into an ongoing master lease for some or all of the stores that allows for their continued operation.

Sears said it has received a letter from ESL Investments suggesting that it acquire all or a portion of its Kenmore brand, the home improvement business of the Sears Home Services division and the PartsDirect business of the Sears Home Services division.

According to the letter, Sears has marketed these assets for almost two years, but has not been able to reach agreements with potential buyers.

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A sale would give the retailer a cash injection as it works to restructure its business after racking up more than $10.8 billion in losses over the past seven years. ESL said it would also be open to assuming some of Sears' debt.

Lampert said he won't negotiate this deal on behalf of Sears to avoid a conflict of interest.

The letter noted that ESL did not care whether it or another third-party ultimately took over the assets, so long as they were divested "in the near term at a full and fair value". Under that scenario, Sears would then lease the stores to keep running them, as it has been doing for numerous stores it has sold in the last few years. Sears sold its Craftsman tool brand to Stanley Black & Decker for $900 million in early 2017; the Kenmore brand is worth at least that. It did not provide a valuation of the Kenmore brand but offered to submit a proposal and said it believed it could close on a deal in 90 days.

The retailer said the proposal would be considered by a committee of independent directors on the company's board and Lampert would not participate in any pursuant discussions unless specifically requested by that board. Previous year the company admitted in a filing that there is "substantial doubt" about its ability to remain in business.