Sears, Chairman of the Board, Lenders Seek Breakthrough on Loan in Bankruptcy: Sources

(Reuters) – Sears Holdings Corp (SHLDQ.PK) is in talks with President Eddie Lampert and lenders on an agreement to expand bankruptcy financing to avoid liquidation, said people familiar with the subject.

Negotiations come at a critical time for Sears because they need enough money to keep their shelves stocked during the holiday season and enough support from creditors and sellers to go out of the bankruptcy procedure.

Sears filed Chapter 11 bankruptcy on October 15, with the goal of closing approximately 142 of its 700 stores by the end of the year, questioning the 125-year-old retailer's future that once dominated shopping centers in the United States. the era of Internet shopping.

Lampert's hedge fund, ESL Investments Inc., plans to work with other potential lenders to help finance the bankruptcy up to $ 450 million in exchange for significant collateral held by Sears' banks, including mortgage leases. stores, said these sources.

In exchange for the cancellation of their claims on the guarantee, the banks would have the opportunity to reduce their exposure to Sears by contributing $ 150 million to the financing of the bankruptcy, instead of the $ 300 million originally pledged .

Maneuvers would have the combined effect of increasing the current total financing of bankruptcy funding from $ 300 million to $ 600 million.

Negotiations remain fluid and the outlines of the deal, including the amount of money that lenders would extend, could change, sources said. The sources refused to be identified because the negotiations are confidential.

A spokesman for Sears declined to comment.

Sears struggled to secure additional funding beyond what the banks originally promised. This is because ESL and other potential new lenders have been reluctant to provide up to $ 300 million, which would be second in terms of repayment and would not have the collateral required to secure the loan, said the sources.

The new loan under discussion aims to give Sears, which employs about 68,000 people, more leeway to avoid liquidation and reorganize itself around a smaller set of stores likely to be set up. on sale.

Sears held discussions with ESL about auctions of about 400 healthier stores that executives say could keep the retailer alive, according to court records. One source said ESL was now weighing 500 stores. ESL would be a bidding bidder in this scenario, submitting an initial bid that others might then attempt to overtake, according to the documents filed by the court.

Sources said Sears was pursuing many options related to its bankruptcy financing.

A hearing to finalize the financing of Sears' bankruptcy is scheduled for November 15, according to a court file. According to court records, the deadline for Sears to obtain a bidder for its stores is currently December 15.