Exclusive: Sears nears bankruptcy financing deal with Lampert's hedge fund – sources

(Reuters) – Sears Holdings Corp (SHLDQ.PK$ 300 million, with Chairman Eddie Lampert's hedge fund contributor, people familiar with the matter said on Monday.

The deal, which can provide enough money for the beleaguered U.S. retailer to keep its shelves stocked during the holiday season and retain sufficient support of creditors and vendors to emerge from bankruptcy proceedings.

The stakes are high, given that Sears faces a Dec. 15 deadline to name a so-called stalking-horse bidder that would make an initial offer.

Sears is in the final stages of negotiations with multiple investment firms to $ 450 million in bankruptcy financing for key collateral currently being held by banks lending to the retailer, the sources said. Cyrus Capital Partners LP is one of the investment firms in Sears, one of the sources said.

That collateral includes some store leases, the sources said. In return, the banks are expected to reduce their exposure to Sears by lending $ 150 million, instead of the $ 300 million originally promised, to the department store operator, according to the sources.

Lampert is not expected to contribute to the financing after the retailer, the sources said. Lampert's hedge fund, ESL Investments Inc, had been in discussions in recent days about participating in the financing, the sources added.

However, ESL still remains open to lending additional money to Sears, the company said.

A financing deal is expected to be announced as soon as this week, but the negotiations remain fluid and an agreement is not guaranteed, the sources said.

Sears spokesman and a Cyrus spokeswoman declined to comment.

Sears filed for Chapter 11 bankruptcy on Oct. 15 with a plan to close on 142 of its 700 stores by the end of the year, throwing into the 125-year-old retailer that once dominated US malls but has withered in the age of internet shopping.

Sears, which employs roughly 68,000 people, is negotiating with ESL, which is believed to be able to keep the retailer alive, according to the sources and short filings.

ESL could end up bidding on up to 500 Sears stores, or more than the 400 healthier stores Sears initially identified when filing for bankruptcy, one of the sources said.

Sears has had some original financing. This is because ESL and other possible new lenders are being provided as much as $ 300 million that would be needed in the future.

A hearing to finalize Sears' bankruptcy financing is scheduled for Nov. 15, according to a short filing.