- Proposed offer from Eddie Lampart (former CEO of Sears Holdings) was previously rejected.
- Eddie Lampart was given one last chance to make an offer on Tuesday January 8th.
- Sears Holdings accepted a last minute deal, avoiding bankruptcy.
CCN.com previously reported that Sears had rejected a bailout offer and would be liquidating its business instead. Now, at the last minute, Sears has struck a deal to avoid bankruptcy, according to CNN. The company, which also owns Kmart, appears to be playing deal or no deal with creditors and prospective buyers. This morning CCN.com reported that Lampert was given one last chance to make an offer, and the firm today announced it had accepted his revised offer.
The proposed offer from Eddie Lampert was previously rejected as unacceptable by Sears Holdings. With new revisions, they opt to accept the $4.4 billion offer. Acceptance of the bid as reasonable opens up a bidding period until January 14th. No one else offers terms which will keep the retailer operational. There is still a possibility that other offers will be higher for the roughly 1200 Sears and Kmart locations and associated assets.
Other Creditors Reject Offers Which Include Debt Forgiveness
An important part of the deal with Lampert is that it will forgive $1 billion that the company owes him. A representative for other Sears creditors says that he will continue to fight any offer which includes loan forgiveness. He feels the forgiveness is improper because Eddie Lampert was CEO of Sears at the time he made the loans to the company.
Creditors besides Lampert believe that liquidating Kmart and Sears is the only reasonable way to satisfy their debts. Of the rescue strategies the former catalog-only store has proposed, they say they are “an unjustified and foolhardy gamble with other people’s money.”
It is currently unclear what amount that Lampert will actually pay for Sears. One part of the deal requires the company to acquire $1.3 billion in operating loans from banks. He must also make a $130 million cash payment on an immediate basis.
Bankruptcy Court Judge Robert Drain must approve the deal from Lampert or any other prospective offers. Ultimately his decision will be the most crucial factor. If another bidder comes in higher than Lampert, Sears lawyers must make a successful argument as to why they should take a lower offer that allows them to stay in business.
Wal-Mart Crushing All Aspects of Sears’ Business
Sears faces tough competition from firms like Walmart. Walmart competes with in every facet of its business, including pharmacies and auto care centers. Its stock was up $2 from a 24-hour low of $93 and change.
Sears, meanwhile, also traded upwards at time of writing, although it was still down from its 3-month high by about 50%.
The results of the bankruptcy hearings should be complete within the week. If the deal is approved all around, the retailer will stay operational for the foreseeable future. If the firm develops realistic and profitable strategies to compete, it might see a new chapter in its 126-year history.
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