Exclusive: Sears President Lampert Seeks Bankruptcy Funding Partner – Sources

(Reuters) – Sears Holdings Corp (SHLD.O) President Eddie Lampert is in discussion with at least one potential partner to contribute to a $ 300 million bankruptcy loan requested by the US retailer, people familiar with the subject said Sunday.

Lampert's hedge fund, ESL Investments Inc., has had discussions with Cyrus Capital Partners LP, an investment firm that holds a portion of Sears' existing debt, about sharing the burden of financing the loan of 300 millions of dollars, which would be separated by an additional $ 300 million. bankruptcy loan that Sears banks have offered to provide, sources said.

The sources asked not to be identified because the deliberations are confidential. A spokesman for Sears did not respond to a request for comment Sunday.

Sears' survival will depend on the willingness of creditors and suppliers to keep the company afloat. Strong sales during the holiday season will be crucial in determining this, urging the department store operator to obtain sufficient funding to remain operational until that date.

As part of its hedge fund, Lampert has invested billions of dollars in Sears since its inception in 2005 in its current form, through a merger with its counterpart Kmart. As a result, he is the main shareholder and creditor of the department store operator.

The bankruptcy loan with banks, including Bank of America Corp. (BAC.N), Wells Fargo & Co (WFC.N) and Citigroup Inc (C.N), falls on the front line of repayment in the Sears bankruptcy case, while the $ 300 million loan Sears seeks from lenders, including ESL, would be repaid later.

Some Sears representatives in bankruptcy also suggested that Lampert seek to replace the $ 300 million bank loan with his own funding, sources said. That would mean that Lampert would potentially contribute $ 600 million in bankruptcy loans, the sources said.

Such a move would potentially consolidate Sears' obligations during the bankruptcy proceedings and give Lampert greater control over the company's lawsuit, insofar as he is essentially the main lender, said the debtor, the same source said. . As things stand, Sears plans to have two loans of this type.

However, it is unclear whether Lampert can or is willing to provide financing to repay the banks that lend money to Sears in bankruptcy, sources said. Lampert could oppose the idea and remain focused on his contribution to the $ 300 million loan Sears wants, which would be conditional on the banks' repayment, sources said.

The sources warned that negotiations between Sears, Lampert and other potential sources of bankruptcy financing remained fluid and might not result in an agreement. On October 15, Sears filed for bankruptcy protection in White Plains, NY, with the goal of closing approximately 142 of its 700 stores by the end of the year and selling up to 400 of the most successful stores at an auction in January to a buyer will keep them operational.

Lampert has stepped down from his Sears CEO position following the bankruptcy filing, and is considering bidding for the stores going on sale.

Sears, which employs nearly 70,000 people, has not made any profit since 2011. It has faced competition from ecommerce companies such as Amazon.com Inc. (AMZN.O), as well as traditional retailers such as Walmart Inc (WMT.N).

The company has listed assets of $ 6.9 billion and liabilities of $ 11.3 billion in documents filed in the US Bankruptcy Court in the Southern District of New York. A court hearing on Sears bankruptcy financing is scheduled for the week of October 29.