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Sears Holdings
Corp.
SHLD 20.43%
is approaching an agreement with lenders about a bankruptcy plan that would close at least 150 stores and provide a vital loan in order to keep a small footprint of about 300 open locations, according to people close to the file.
As part of the agreement, the lenders, including Bank of America Corp., Wells Fargo & Co. and
Citigroup
Inc.
would provide emergency funding of up to $ 500 million, the population said.
Sears is expected to file Sunday in Chapter 11 of the bankruptcy, the reporters said. The deposit would exceed $ 134 million in loans that Sears will have to repay on Monday.
As part of the proposed reorganization plan, Sears would close about 150 stores immediately, said one of the people. 250 additional stores will be under evaluation. About 300 stores would remain open.
The company currently has about 700 Sears and Kmart stores, said this person.
Sears, a US commodity since 1886, has struggled in recent years by closing stores, selling assets and borrowing money. But it was not always like that. Gordon Weil, author of "Sears, Roebuck, USA", tells the story of the retailer. Photo: Getty
The Wall Street Journal on Tuesday announced for the first time that the 125-year-old chain hired M-III Partners LLC, a boutique consulting firm, to prepare for bankruptcy. The amount of short-term financing that the company can align prior to filing will help determine if Sears can continue and how many stores will survive.
Initially, banks took a tougher stance and were only willing to provide debtor-to-operator financing that would allow Sears to sell inventory and close all of its stores. But as discussions progressed, the parties met Friday around a plan to keep Sears active with a much smaller footprint, people said.
Assets such as the Kenmore appliance brand and Sears auto centers could be sold once the company goes bankrupt, said one of the people. Edward Lampert, the hedge fund manager, is the chairman of the board, the chief executive officer, the largest shareholder and the largest creditor of Sears.
Mr. Lampert offered to buy Kenmore for $ 400 million in August. But the agreement never received the blessing of a special committee of independent Sears directors. And it was put on hold after it became clear that the creditors would not support a broader extrajudicial restructuring proposed by Mr Lampert.
Mr. Lampert, who has controlled Sears for more than 10 years, has repeatedly bailed the retailer with short-term borrowings. However, he is not willing to lend extra money if a reorganization plan has not been agreed with the banks, said one of the officials.
Banks are the primary lenders of a $ 1.5 billion asset-backed credit facility backed by inventories, credit card receivables and pharmaceuticals.
-Soma Biswas contributed to this article.
Write to Lillian Rizzo to [email protected] and Suzanne Kapner to [email protected]
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